How to Calculate UAE Corporate Tax (2026): Formula & Worked Examples
UAE corporate tax is calculated by starting from accounting income in your financial statements, applying the adjustments required by the tax law to arrive at taxable income, then charging 0% on the first AED 375,000 and 9% on everything above it. The formula: tax due = (taxable income − 375,000) × 9%, with a floor of zero. A business with AED 1,000,000 of taxable income pays AED 56,250.
Step 1 — Start with accounting income
Accounting income is the profit shown in financial statements prepared under IFRS (or IFRS for SMEs). Cash basis accounting is permitted where revenue does not exceed AED 3 million. This figure is the starting point, not the answer — tax law and accounting standards treat several items differently audited financial statements →.
Step 2 — Apply the adjustments
Add back or deduct the items the corporate tax law treats differently.
Added back (increase taxable income):
- 50% of entertainment expenditure
- Fines and penalties (including FTA penalties themselves)
- Donations to entities that are not qualifying public benefit entities
- Interest expenditure above the deduction limitation, where applicable
Deducted (reduce taxable income):
- Exempt income, such as qualifying dividends and income covered by the participation exemption
- Tax losses brought forward, capped at 75% of taxable income in the year used
The result is taxable income.
Step 3 — Apply the rates
0% on taxable income up to AED 375,000. 9% on the portion above it. The 0% band is not a threshold you fall off — it applies to everyone, so the first AED 375,000 is always untaxed.
| Taxable income | Tax due |
|---|---|
| AED 300,000 | AED 0 |
| AED 500,000 | AED 11,250 |
| AED 1,000,000 | AED 56,250 |
| AED 5,000,000 | AED 416,250 |
Three worked examples
Example 1 — small trading company. Accounting income AED 300,000, no adjustments. Taxable income AED 300,000, entirely within the 0% band. Tax due: AED 0. The return is still mandatory nil returns →.
Example 2 — consultancy with adjustments. Accounting income AED 1,150,000. Entertainment expenditure was AED 100,000, so AED 50,000 is added back. A traffic fine of AED 5,000 is added back. Taxable income = 1,150,000 + 50,000 + 5,000 = AED 1,205,000. Tax = (1,205,000 − 375,000) × 9% = AED 74,700.
Example 3 — loss carried forward. Accounting income AED 800,000, with AED 900,000 of losses brought forward. The offset is capped at 75% of taxable income: 75% × 800,000 = AED 600,000 usable this year. Taxable income = 800,000 − 600,000 = AED 200,000, which sits within the 0% band. Tax due: AED 0, with AED 300,000 of losses still carried forward.
Run your own figures tax calculator →.
What the calculation looks like under Small Business Relief
If Small Business Relief is elected, the business is treated as having no taxable income for the period — the calculation above is not performed and tax due is zero, provided every condition is met Small Business Relief explained →.
Free zone companies calculate differently
A Qualifying Free Zone Person pays 0% on qualifying income and 9% on non-qualifying taxable income, with the de minimis test determining whether QFZP status survives at all qualifying income rules →.
We compute your return and a tax expert checks every figure. From AED 499 all-inclusive pricing →.
Corporate tax returns from AED 499.
Fixed fees. Prepared through the asly tax platform, reviewed and filed on EmaraTax by a third-party licensed tax advisory before your deadline.