Overview

The corporate tax in the UAE is a federal tax imposed on the net income or profit of corporations and other businesses. The tax rate, as of the latest legislation, is set at 9% on taxable income exceeding AED 375,000. It’s important to note that this tax regime aims to ensure fairness and simplicity while promoting economic growth and development.

Small Business Relief is provided to small Businesses resident for Corporate Tax purposes in the UAE to ease their implementation of the Corporate Tax regime. Small Business Relief reduces the compliance obligations faced by small Businesses in the early stages of the Corporate Tax regime, primarily by alleviating the burden of having to calculate and pay Corporate Tax. Any eligible Taxable Person (being a Resident Taxable Person – either a Natural Person or a Juridical Person) with Revenue below or equal to AED 3,000,000 In a relevant Tax Period and all previous Tax Periods that end on or before 31 December 2026.

Certain entities are exempt from paying corporate tax. These include:

  • Businesses involved in the extraction of natural resources, which are subject to emirate-level taxation.
  • Government entities, government-controlled entities, and quasi-government entities.
  • Entities registered in free zones, provided they comply with all regulatory requirements and do not conduct business with mainland UAE.
  • Charities, public benefit organizations, and certain other non-profit organizations.
Taxable Income Calculation

Revenue Recognition

Revenue recognition follows the accrual accounting method, where income is recognized when earned, regardless of when it is received. This includes income from the sale of goods, services rendered, and other business activities.

Deductible Expenses

Businesses can deduct expenses incurred wholly and exclusively for business purposes. These include:

Employee Salaries And Wages

Rent And Utilities

Depreciation Of Assets

Interest On Business Loans

Office Supplies And Other Operational Costs