In the ever-changing world of business in the United Arab Emirates (UAE), knowledge about corporate tax in UAE is important for businesses to be able to ensure compliance and proper financial planning. Having been introduced in June 2023 pursuant to Federal Decree-Law No. 47 of 2022, the federal corporate tax regime of the UAE represents a major departure towards increased fiscal transparency while preserving the country’s attractiveness as an international business destination. As we’re heading into 2025 companies will have to deal with changes including DMTT – Domestic Minimum Top-up Tax for large multinationals, as well manufacturers tax rates UAE and exemptions.
This post explains step by step how to calculate company tax in UAE including relevant factors for corporate tax in UAE 2025. Whether you’re a Dubai startup company, or large multi-national organization, if you have mastered these calculations your business will meet the corporate tax deadline and maximize your potential TAX position. Additionally, we’ll cover the corporate tax-filing procedures in different regions like corporate tax Dubai, and the importance of hiring corporate tax consultants in UAE to help business owners comply without breaking a sweat.
Understanding Corporate Income Tax
An income tax in the UAE is a tax on a corporation’s taxable profits and that applies to net profits, with a commercial scale of 9% for businesses which have exceeded AED 375,000. Small businesses and startups are relieved because for them, the first AED 375,000 is taxed at 0%. The regime applies to local juridical persons on worldwide income, and non-residents on profits derived from a source within the UAE or through a PE.
Key features include:
- Exemptions and benefits: Qualifying Free Zone Persons (QFZPs) are taxed at 0% on income such as exports or trade with non-UAE parties.
- Deductions: Deductible expenses such as salaries, rent and depreciation lower taxable income.
- 2025 Updates: Big companies (€750 million global turnover) will be subject to a 15% minimum effective rate from 1 January 2025 under DMTT that removes all profit-shifting loopholes via OECD Pillar Two.
In the case of corporate tax Dubai entities, the rules are consistent with those dictated federally. But free zones in Dubai provide added incentives for qualifying activities tech. As well as trading companies being obvious examples.
Step-by-Step Guide
Here’s how you can do it Corporate Tax in the UAE. It is determined based on your financial statements under International Financial Reporting Standards (IFRS). It involves first adjusting taxable income, then applying the rate. Here’s a clear breakdown:
To Calculate Accounting Profit(Net Profit Before Tax):
- Pull your net profit from your audited financial statements.
- That’s your starting point how much you received in revenue minus allowable expenses.
Make Tax Adjustments:
- Add Back Non-Deductible Expenses: These are things like fines and penalties, personal expenses or non-business contributions.
- Deduct Exempt Income: Deduct dividends of UAE Resident aliens, certain capital gains, or group relief.
- Deductible Expenses: Expense business outlays (e.g., marketing, utilities), depreciation and losses brought forward annually (up to 75% of taxable income).
- Realized Gains/Losses: Include only realized capital gains; do not count unrealized ones.
Apply the Tax Rate:
- 0% on the first AED 375,000.
- 9% on the surplus (with most businesses).
- For multinationals in corporate tax in UAE 2025 that are eligible for the DMTT, adjust the effective rate to hit 15% and top-up if lower.
Account for Credits and Reliefs
- Deduct foreign tax credits (if you have them) or losses from prior years.
- In the case of a QFZP in Corporate Tax Dubai, for example, it is taxable only to non-qualifying income (e.g., domestic sales).
Corporate Tax Deadline and Filing
Corporate tax filing is not optional returns need to be filed and paid 9 months after your financial year-end. For corporate tax deadline in 2025:
Calendar-Year Businesses (Jan 1–Dec 31, 2024): File by September 30, 2025.
Non-Calendar Examples:
FY Ended June 30, 2024: March 31, 2025.
End of FY March 31, 2025: Dec 31, 2025.
Registration Deadlines:
Threshold for businesses having turnover > AED 1 million to register on or before March 31,2025 failing which penalty is AED 10,000. File electronically via the FTA’s Emara Tax portal using your Tax Registration Number (TRN).
Penalties for Late Filing:
AED 500–10,000 for non-registration.
1% monthly interest for late tax payment and penalties of up to AED 20,000 for each late return.
This is simplified through corporate tax Dubai by the FTA; whereby free zone companies are still required to confirm their eligibility to continue benefitting from 0%.
Key Updates and Implications
Looking ahead to corporate tax in UAE 2025, the DMTT rollout ensures a 15% minimum for giants like tech firms or banks, aligning with global standards. Expect:
- Increased R&D credits (30–50% by 2026).
- Simplified rules for investment funds.
- Stricter nexus rules for non-residents.
These changes improve the competitiveness of UAE but require strong documentation. Businesses must re-evaluate structures (for example using Free Zones for IP income at 0%).
Why Partner with CBM Consultants?
CBM Consultants plays an essential role for accurate corporate taxes in the UAE to be calculated compliantly following the UAE corporate tax law. We assist the businesses in calculating their taxable income as per the provision of Federal Decree-Law No 47 of 2022 and will ensure all relevant deductions, exemptions and tax rates have been applied. This includes overseeing the efficient preparation and submission of corporate tax returns via the FTA portal, mitigating the risk of fines due to late or incorrect filing. In addition, our accountants keep up-to-date financial records and reports to back-up compliance and audit preparation. We also provide businesses with strategic tax advice and planning to optimise their tax position while remaining compliant with UAE laws. CBM increases accuracy, efficiency, and confidence in corporate tax preparation when we proactively identify and resolve errors in tax calculations early.
Conclusion
Mastering corporate tax in UAE empowers your business to focus on growth amid a progressive tax environment. With the formula for calculation, hitting corporate tax deadline dates as well as staying ready for corporate tax filing will help you hold in accordance with federal guidelines and make the most of incentives in corporate tax Dubai.
