How UAE Tax Is Calculated
In the UAE, corporate tax is charged on the profits your business makes. The good news is, it’s calculated using your existing financial statements — so you don’t need to keep separate tax records.
Key Parts of the Calculation
1. Start with Accounting Profits
Your taxable income starts with the net profit or loss shown in your company’s financial statements.
Example: If your business makes AED 500,000 profit, this is the starting point for calculating your corporate tax.
2. Make Adjustments
- Unrealized Gains or Losses: Gains on assets you haven’t sold aren’t taxed. Revenue-related gains are included.
- Exempt Income: Some income, like profits from foreign branches or qualifying investments, may be tax-free.
- Carry Forward Losses: If your business had a loss last year, you can use it to reduce taxable profits in future years.
3. Deduct Allowed Expenses
You can subtract business costs such as salaries, rent, depreciation, and R&D.
Some things cannot be deducted, like recoverable VAT or donations to unapproved organizations.
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