With UAE Corporate Tax now fully implemented, businesses must clearly understand how taxable income is calculated to ensure compliance and avoid penalties.
What is Taxable Income?
It is the net profit of a business after adjusting accounting profit for tax-specific rules under the UAE Corporate Tax law.
How It is Calculated
Taxable income = Accounting profit
± Adjustments (additions & deductions)
Common Adjustments Include:
- Non-deductible expenses (fines, penalties)
- Entertainment expenses (partially restricted)
- Depreciation adjustments
- Related party transaction adjustments
Corporate Tax Rates
- 0% on income up to AED 375,000
- 9% on income above AED 375,000
Key Compliance Requirements
- Maintain audited financial statements
- Proper bookkeeping and VAT alignment
- Transfer pricing documentation (if applicable)
Conclusion
Correct calculation of your income ensures compliance and helps businesses optimize their tax position legally. Confused about your income? Let Profits Plus UAE handle your corporate tax calculations accurately.
