In general, such taxes are calculated on a company’s accounting net profit/income after adjusting for certain elements defined in the UAE Corporate Tax Code.
On January 31, 2022, the UAE Ministry of Finance announced the implementation of a federal company tax in the UAE, effective for fiscal years beginning on or after June 1, 2023.
In general, such taxes are determined on a company’s accounting net profit/income after making adjustments for certain factors defined in the UAE Corporate Tax Law.
Corporate Tax Rate in UAE will be applicable at the following rates:
Income/profit as per Financials AED 0-AED 375,000 Above AED 375,000 Tax Rate 0% 9%
| Income/Profit as Per Financials | Tax Rate |
| AED 0 -375,000 | 0% |
| Above AED 375,000 | 9% |
For example, if the company produces a taxable profit of AED 400,000 in a fiscal year, the corporate tax due is computed as follows:
1.Taxable income of AED 0-AED 375.000 at 0% equals AED 0.
- A small portion of taxable income over AED 375,000 (i.e., AED 400,000 – AED 375,000 = AED 25,000) at 9% = AED 2,250
Will any type of business be bound to corporate tax in the UAE?
The tax will apply to all firms, including those in free zones, with the exception of natural resource extraction activities. Personal income from work, real estate, and other investments, as well as any other income received that does not require a commercial license or permit to operate in the UAE, will be exempt from corporate tax.
