Quick answer
UAE corporate tax is calculated on taxable income: accounting profit adjusted for non-deductible expenses, exempt income, reliefs and losses. Taxable income up to AED 375,000 is taxed at 0% and the rest at 9%. A company with taxable income of AED 1,000,000 therefore pays AED 56,250. Qualifying Free Zone Persons pay 0% on qualifying income.
Key takeaways
- Rates: 0% on taxable income up to AED 375,000, 9% above.
- Start from accounting profit and adjust it to taxable income.
- Common add-backs: 50% of entertainment, fines and penalties, excess interest above the cap.
- Losses offset up to 75% of taxable income each year, carried forward with no time limit.
- Return and payment due within 9 months of the financial year end.
Table of contents
UAE corporate tax applies to financial years starting on or after 1 June 2023. The tax is charged on taxable income, not on accounting profit, so the calculation starts with your financial statements and then adjusts them. This guide sets out the rates, the steps and worked examples. For help with your return, see our corporate tax computation and filing service.
Want us to compute and file it? Talk to our corporate tax consultants.
What Are the UAE Corporate Tax Rates?
| Taxpayer | Rate |
|---|---|
| Taxable income up to AED 375,000 | 0% |
| Taxable income above AED 375,000 | 9% |
| Qualifying Free Zone Person, qualifying income | 0% |
| Qualifying Free Zone Person, other taxable income | 9% |
| Small Business Relief (revenue up to AED 3 million, periods ending by 31 December 2029) | Treated as no taxable income |
| Large multinational groups (consolidated revenue of EUR 750 million or more) | 15% domestic minimum top-up tax from 2025 |
Steps to Calculate Corporate Tax in the UAE
- Start with accounting profit from financial statements prepared under IFRS (or IFRS for SMEs, or the cash basis where allowed).
- Remove exempt income, such as qualifying dividends and gains on qualifying participations.
- Add back non-deductible expenses, such as fines, penalties and the non-deductible part of entertainment.
- Apply the interest limitation: net interest above AED 12 million is limited to 30% of tax EBITDA.
- Adjust related-party and connected-person transactions to arm’s length or market value.
- Apply reliefs and losses: loss relief is limited to 75% of taxable income.
- Apply the rates: 0% on the first AED 375,000 and 9% on the remainder.
- Deduct any foreign tax credit and withholding tax credit available.
Which Adjustments Are Most Common?
| Item | Corporate tax treatment |
|---|---|
| Client entertainment | 50% deductible |
| Fines and penalties | Not deductible |
| Donations | Deductible only to qualifying public benefit entities |
| Owner and director pay | Deductible up to market value under the connected person rules |
| Dividends from UAE companies | Exempt |
| Net interest expense above AED 12 million | Limited to 30% of tax EBITDA |
| Depreciation | Generally follows the accounting treatment |
Worked Example 1: Mainland Company
| Item | AED |
|---|---|
| Accounting profit | 1,200,000 |
| Add: 50% of client entertainment (AED 60,000) | 30,000 |
| Add: traffic fines | 5,000 |
| Less: dividend from a UAE subsidiary | (235,000) |
| Taxable income | 1,000,000 |
| Tax at 0% on first 375,000 | 0 |
| Tax at 9% on 625,000 | 56,250 |
| Corporate tax payable | 56,250 |
Worked Example 2: Using Tax Losses
A company has AED 800,000 of tax losses brought forward and taxable income of AED 600,000 this year.
| Item | AED |
|---|---|
| Taxable income before losses | 600,000 |
| Maximum loss relief (75%) | (450,000) |
| Taxable income after losses | 150,000 |
| Corporate tax payable | 0 (below AED 375,000) |
| Losses carried forward | 350,000 |
Worked Example 3: Qualifying Free Zone Person
A QFZP earns AED 4,000,000 of qualifying income and AED 150,000 of non-qualifying income, within the de minimis limit.
| Item | AED |
|---|---|
| Qualifying income, taxed at 0% | 0 tax |
| Non-qualifying income within de minimis | Treated as qualifying, 0% |
| Corporate tax payable | 0 |
If non-qualifying revenue went above the lower of 5% of revenue or AED 5 million, the company would lose QFZP status and be taxed at the standard rates. See our QFZP guide.
Expert tip: prepare the tax computation from final, audited figures. Adjusting the return after audit changes means amending schedules and, sometimes, transfer pricing disclosures.
When Must Corporate Tax Be Filed and Paid?
The corporate tax return is filed on EmaraTax and the tax paid within nine months of the end of the financial year. A December year end means filing and payment by 30 September of the following year. Records must be kept for seven years.
Guide to UAE Corporate Tax Calculation – FAQs
01.What is the corporate tax rate in the UAE?
0% on taxable income up to AED 375,000 and 9% on taxable income above that. Qualifying Free Zone Persons pay 0% on qualifying income, and large multinational groups are subject to a 15% domestic minimum top-up tax.
02.How do I calculate UAE corporate tax?
Start with accounting profit, add back non-deductible expenses, remove exempt income, apply reliefs and losses to get taxable income, then apply 0% to the first AED 375,000 and 9% to the rest.
03.How much tax is due on AED 1 million of taxable income?
AED 56,250: 0% on the first AED 375,000 and 9% on the remaining AED 625,000.
04.Is client entertainment deductible?
Only 50% of client entertainment expenses are deductible for corporate tax.
05.Can losses reduce corporate tax?
Yes. Tax losses can be carried forward with no time limit and offset against up to 75% of taxable income each year, subject to ownership and business continuity conditions.
06.When is corporate tax paid?
The return is filed and the tax paid within nine months of the end of the financial year.
