UAE Corporate Tax taxable income is determined by taking the accounting net profit or loss reported in financial statements prepared under IFRS, then applying the adjustments required by Federal Decree-Law No. 47 of 2022. Corporate Tax is charged at 0% on taxable income up to AED 375,000 and 9% above it. Abdelhamid & Co (MOE LC0106-01, FTA TAN 30003958) supports businesses across Dubai, Sharjah and Ajman.
How UAE Corporate Tax Taxable Income Is Determined
The FTA Corporate Tax Guide (CTGDTI1) confirms that the starting point for determining taxable income is the accounting income — the net profit or loss shown in financial statements prepared in line with International Financial Reporting Standards. A business does not invent a separate tax profit; it begins with its audited accounting result and then makes a defined set of adjustments. Our Corporate Tax services guide UAE companies through every step of this calculation.
These adjustments exist because some accounting figures are treated differently for tax. The law removes exempt income, adds back non-deductible expenditure, applies interest limitation rules, and accounts for tax losses and tax credits before arriving at the final taxable base.
UAE Corporate Tax Rates and Key Figures
The rate structure is deliberately simple, but the thresholds matter for every business in the UAE, from Dubai free zone entities to mainland firms in Sharjah and Ajman.
| Item | Details |
|---|---|
| Rate up to AED 375,000 | 0% of taxable income |
| Rate above AED 375,000 | 9% of the excess |
| Starting point | Accounting net profit/loss under IFRS |
| Tax Loss offset cap | 75% of taxable income per period |
| Interest deduction de minimis | AED 12 million net interest |
The Step-by-Step Calculation Method
To move from accounting profit to Corporate Tax payable, the guide sets out a logical sequence applied by our team for clients across the UAE:
- Step 1 — Accounting income: start with net profit/loss per the IFRS financial statements for the Tax Period.
- Step 2 — Remove exempt income: deduct dividends and other income that the law treats as exempt.
- Step 3 — Adjust expenditure: add back non-deductible items and apply partial-deduction rules (for example, 50% of entertainment).
- Step 4 — Apply interest limitation: restrict net interest to the greater of 30% of adjusted EBITDA or AED 12 million.
- Step 5 — Apply losses and credits: offset carried-forward Tax Losses (up to 75%) and deduct any Foreign Tax Credit.
A worked example: a Dubai trading company reports AED 1,000,000 accounting profit, with AED 100,000 of exempt dividends and AED 50,000 of disallowed expenses. Taxable income becomes AED 950,000, and Corporate Tax payable is 9% of (950,000 − 375,000) = AED 51,750.
Unrealised Gains, Losses and the Realisation Basis
By default, unrealised gains and losses recognised in the accounts are included in taxable income. However, a Taxable Person may make an irrevocable election in their first Tax Period to use the realisation basis, taxing such gains and losses only when assets or liabilities are actually realised. This election can significantly affect cash flow for asset-heavy businesses in the UAE.
Common Mistakes UAE Businesses Make
The most frequent errors we correct during a Corporate Tax compliance review include treating the accounting profit as the final taxable figure, forgetting to add back non-deductible expenses, and missing the realisation-basis election deadline. Each mistake either overstates or understates the tax due and can trigger FTA penalties.
Why Choose Abdelhamid & Co
Our firm is a Ministry of Economy licensed audit and tax practice (LC0106-01) and an FTA-registered Tax Agent (TAAN 20033908). We work bilingually in Arabic and English, serve clients across Dubai, Sharjah, Ajman and the wider UAE, and align every Corporate Tax calculation with the audited financial statements we can also prepare.
What is the starting point for UAE Corporate Tax taxable income?
The starting point is the accounting net profit or loss reported in financial statements prepared under IFRS. The Federal Tax Authority then requires defined adjustments — removing exempt income and non-deductible expenses — to arrive at taxable income for the Tax Period.
What is the UAE Corporate Tax rate in 2024?
Corporate Tax is charged at 0% on taxable income up to AED 375,000 and 9% on the portion above AED 375,000 under Federal Decree-Law No. 47 of 2022. This applies to mainland and most free zone businesses across Dubai, Sharjah and the UAE.
How is UAE Corporate Tax payable calculated?
Take taxable income, subtract AED 375,000, and apply 9% to the remainder, then deduct any Foreign Tax Credit. For example, taxable income of AED 950,000 produces Corporate Tax payable of AED 51,750 before credits.
What is the realisation basis election?
It is an irrevocable election, made in the first Tax Period, to recognise unrealised gains and losses only when assets or liabilities are realised, rather than as they appear in the accounts. It helps asset-heavy UAE businesses manage tax cash flow.
Does accounting profit equal taxable income in the UAE?
No. Accounting profit is only the starting point. Taxable income is reached after removing exempt income, adding back non-deductible expenditure, applying interest limitation rules, and accounting for tax losses and credits as set out in the Corporate Tax Law.
Related Services
- Corporate Tax Registration & De-Registration — EmaraTax registration support
- Corporate Tax Return Filing — annual return preparation
- Free Zone CT Eligibility — qualifying income assessment
For the official legislation see the Federal Tax Authority and the Ministry of Finance, or read more on our Insights page.
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