UAE Corporate Tax (CT) has been in effect since June 2023. Here is a guide to calculating your UAE CT liability — with worked examples for different business scenarios.
UAE CT Rate Structure
Standard rates: 0% on taxable income up to AED 375,000. 9% on taxable income above AED 375,000. Small Business Relief (optional): 0% on ALL income (no threshold applies) if annual revenue ≤ AED 3,000,000. Qualifying Free Zone Persons (QFZP): 0% on qualifying income. 9% on non-qualifying income. MNEs (Revenue ≥ AED 3.15B): 15% CT under the OECD Pillar Two global minimum tax framework.
UAE CT Calculation: Standard Business Example
Company: mainland LLC, no SBR election. Annual revenue: AED 2,000,000. Business expenses: AED 1,400,000. Taxable income (accounting profit): AED 600,000. CT calculation: First AED 375,000: 0% = AED 0. Remaining AED 225,000 (AED 600,000 − AED 375,000): 9% = AED 20,250. Total UAE CT: AED 20,250.
UAE CT Calculation: Small Business Relief Example
Same company, elects for Small Business Relief. Revenue: AED 2,000,000 (under AED 3M threshold). Taxable income: treated as AED 0 under SBR. Total UAE CT: AED 0. SBR election: file simplified CT return confirming the election. No income statements required. Saving: AED 20,250 versus not electing SBR. Caveat: no loss carry-forward in the SBR year (if you had a loss year coming, do not elect SBR).
UAE CT Calculation: QFZP Example
Free zone company (DMCC member), QFZP-eligible. Qualifying income: AED 1,500,000 (international clients). Non-qualifying income: AED 100,000 (UAE mainland client, not a free zone person). De minimis check: AED 100,000 / AED 1,600,000 = 6.25% — EXCEEDS 5% threshold. QFZP status lost for this year: ALL income taxed at standard rates. First AED 375,000: 0%. Next AED 1,225,000: 9% = AED 110,250. Lesson: actively manage UAE mainland income to stay within the 5% de minimis threshold to retain QFZP status.