Aqid ERPHow UAE corporate tax is worked out
The tax starts from the accounting profit in the financial statements. Exempt income, such as qualifying dividends, comes out; expenses the law does not allow, such as fines, go back in. What is left is the taxable income: the first AED 375,000 of it is taxed at 0%, the rest at 9%.
A resident business whose revenue is AED 3 million or less, in this period and every earlier one, can elect Small Business Relief instead and be treated as having no taxable income. It still registers, files a return and keeps its records.
A worked example
A mainland company makes an accounting profit of AED 520,000, of which AED 20,000 is a fine that cannot be deducted.
| Accounting profit | AED 520,000 |
|---|---|
| Add back the fine | AED 20,000 |
| Taxable income | AED 540,000 |
| First AED 375,000 at 0% | AED 0 |
| AED 165,000 at 9% | AED 14,850 |
| Corporate tax | AED 14,850 |
What it leaves out
This is an estimate for planning. It does not apply a qualifying free zone person's 0% on qualifying income, the rules for groups and members of large multinational groups, transfer pricing, loss relief carried from earlier years, or the transitional rules. The return is filed on EmaraTax within nine months of the period's end.