18 August 2026 · Calculation
How to Calculate UAE Corporate Tax
UAE corporate tax is charged at 0% on taxable income up to AED 375,000 and 9% on taxable income above that threshold - there is no tax on revenue itself, only on taxable income after adjustments. Start from your accounting net profit for the period, apply book-to-tax adjustments (adding back non-deductible expenses such as fines and a portion of entertainment costs, and removing exempt income such as qualifying dividends), then apply the two-tier rate to the resulting taxable income. For example, AED 675,000 of taxable income yields AED 27,000 of tax: the first AED 375,000 is taxed at 0%, and only the remaining AED 300,000 is taxed at 9%. Qualifying Free Zone Persons may access 0% on qualifying income instead, under separate rules.
Exiloz Management & Tax Consultant · Dubai-based FTA-focused advisory · VAT, corporate tax & accounting
From accounting profit to tax payable
Taxable income and accounting profit are not the same figure, and confusing the two is a common calculation error on a first return. The adjustments in between exist because not every accounting expense is tax-deductible, and not every accounting gain is taxable.
- Start with accounting net profit for the period, taken from the income statement.
- Apply book-to-tax adjustments: add back non-deductible items, remove exempt income.
- Apply 0% to the first AED 375,000 of taxable income.
- Apply 9% to taxable income above AED 375,000.
- Deduct any available relief or carried-forward losses before arriving at the final figure.
A simple 9% calculation, step by step
For a Dubai company with taxable income of AED 675,000 after adjustments, the calculation splits cleanly into two bands rather than applying one rate to the whole figure.
- First AED 375,000 of taxable income taxed at 0% = AED 0.
- Remaining AED 300,000 of taxable income taxed at 9% = AED 27,000.
- Total corporate tax payable for the period = AED 27,000.
- Payment is due with the return itself - there is no separate, later payment date.
Where calculations go wrong
Almost every calculation error traces back to skipping a step, rather than getting the maths itself wrong - the two-tier rate is simple once taxable income is correct, but reaching that figure is where the risk sits.
- Applying 9% to revenue or gross profit instead of taxable income after adjustments.
- Forgetting to add back non-deductible expenses like penalties or disallowed entertainment costs.
- Missing an available relief, such as Small Business Relief, that changes the outcome entirely.
- Treating a free-zone licence as automatically 0% without confirming qualifying-income status.
How the calculation differs for free-zone companies
Qualifying Free Zone Persons follow a different route to a low or nil tax bill: qualifying income can be taxed at 0%, while non-qualifying income above the de minimis threshold is taxed at the standard 9%. Getting this split right, not just claiming free-zone status, is what determines the actual liability.
- Confirm Qualifying Free Zone Person status before assuming any income is automatically 0%.
- Split income into qualifying and non-qualifying categories under the applicable rules.
- Non-qualifying income above the de minimis threshold is taxed at the standard 9% rate.
- A single misclassified transaction can affect qualifying status for the whole year.
Carrying tax losses forward
A loss-making period is not simply set aside once the return is filed - it can reduce future tax bills if it is tracked and carried forward correctly. Getting the carry-forward figure right on a loss year is what makes a future profitable year's calculation accurate.
- A tax loss for a period can generally be carried forward to offset against taxable income in future periods, subject to the applicable conditions and limits.
- Losses can typically offset up to a set percentage of taxable income in a later period, rather than the whole amount in one go.
- Ownership continuity and same-business conditions can restrict whether a carried-forward loss remains usable after a change in ownership or activity.
- Keep the loss calculation and its supporting schedule from the loss-making year itself - reconstructing it years later, once queried, is far harder than filing it correctly the first time.
Related guides
Frequently Asked Questions
For Dubai business owners working out what their first corporate tax bill will actually be.
What is the UAE corporate tax rate?
0% on taxable income up to AED 375,000 and 9% on taxable income above that threshold. There is no separate small-business rate outside Small Business Relief, and the same two-tier structure applies across mainland companies regardless of sector.
Is tax charged on revenue or on profit?
On taxable income, which is derived from accounting profit after book-to-tax adjustments - never on gross revenue. A business with high revenue but thin margins can owe far less tax than the top-line figure suggests, once deductible costs and adjustments are applied correctly.
Do free-zone companies use the same rate?
Qualifying Free Zone Persons can access a 0% rate on their qualifying income instead of the standard structure, provided they meet the conditions and correctly split qualifying from non-qualifying income. Where those conditions are not met, the standard 0%/9% calculation applies as it would to a mainland company.
How are non-deductible expenses treated in the calculation?
They are added back to accounting profit before the tax rate is applied, because the law disallows certain costs as deductions - for example, fines and penalties, and a portion of entertainment expenditure. Missing an add-back understates taxable income and can lead to an incorrect return.
What if my business made a loss for the period?
You still calculate and file a return, showing nil taxable income for the period, and the loss may be available to carry forward against future taxable profits subject to the applicable conditions. A loss does not remove the filing obligation.
Does Small Business Relief change the calculation?
Where a business elects Small Business Relief and meets the revenue conditions, its taxable income for the period can be treated as nil rather than moving through the standard two-tier calculation. The election must be made inside the return itself, not applied retroactively.
Can Exiloz calculate my liability?
Yes. Exiloz computes taxable income from your financial statements, applies the correct adjustments and any available reliefs, and confirms the final 0%/9% liability before the return is filed - so the number on the return is one you can rely on.
Know your corporate tax number with confidence
Exiloz computes your taxable income, applies the right adjustments and reliefs, and confirms your exact 0%/9% liability before you file.