UAE Corporate Tax is calculated on taxable income, not simply on a company’s turnover or cash balance. In general, taxable income up to AED 375,000 is subject to a 0% rate and taxable income above that amount is subject to 9%, subject to the law, relevant decisions and any available reliefs or credits.
Revenue and taxable income are different
A business can have substantial sales but modest taxable income after legitimate business costs and applicable tax adjustments. Conversely, accounting profit is not automatically the final taxable amount: the Corporate Tax Law requires adjustments for specified items. The AED 375,000 band is a taxable-income threshold, not a VAT registration threshold and not a revenue allowance.
A practical way to prepare
- Close the accounting records for the correct tax period.
- Reconcile revenue, expenses, bank balances and receivables/payables.
- Identify tax adjustments and keep evidence for each material treatment.
- Check whether a specific relief, exemption, foreign tax credit or Free Zone rule is relevant.
For illustration only, if taxable income after the required adjustments were AED 500,000 and no other relief or credit applied, the first AED 375,000 would be at 0% and the remaining AED 125,000 at 9%. This is not a tax calculation for any particular entity.
Start with the Federal Tax Authority Corporate Tax guidance and the Ministry of Finance overview.
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