UAE Corporate Tax is calculated at 9% of the taxable income exceeding AED 375,000 with all the adjustments like applicable expenditures and deductions. To do that, you have to assess the impact of corporate tax and extract the most precise financial statement of your company. BMS Corporate Tax advisors and auditors help you on preparing financial statements and implement CT for your UAE Business.
UAE has been ‘Heaven’ for entrepreneurs and small business owners who come to Dubai or other Emirates from countries across the globe to establish their dreams. The Ministry of Finance in the UAE has introduced a public consultation document. The document includes information and central aspects of the scheduled CT policy.
With the Corporate Tax to be implemented soon, here are the key points to be considered:
- Type of corporate tax rates to be applied to business profits
- Whether the rates would be high as the developed country
- Restrictions that could be minimized from business profits
In this session, we discuss how Corporate Tax Rates are calculated.
Calculation of Corporate Tax UAE
To calculate the Corporate Tax in the UAE, you need to follow certain steps.
Initially, you need to prepare the books of accounts according to the IFRS (International Financial Reporting Standards) or other similar accounting standards in Dubai, acclaimed by the UAE authorities for CorporateTax conditions. Here, we make that easier for you.
The UAE Corporate Tax at 9% of net profit is shown in the company’s financial statements. You may note that 9% is charged ONLY if the taxable profit crosses AED 375000. This means that the Corporate Tax up to AED 375000 is 0%.
In short,
| Final taxable income | CT to be Calculated |
| If the income is between AED 0 – AED 375,000 | CT at 0% |
| If the income is above AED 375,000, the difference between the final taxable income and AED 375,000 | CT at 9% |
| For Large Multinationals, the difference between the final taxable income and AED 375,000 | CT at 15% |
Here is how the Corporate Tax is calculated if you are under the 9% CT:
For instance, if the income is AED 475000, the Corporate Tax is calculated as:
475000-375000*9/100 = AED9000
Corporate Tax Adjustments to be Considered
According to the FTA's statement, the Taxable Income is calculated using the Taxable Person's accounting income (net profit or loss before tax) as reflected on their financial statements. Our certified Auditors in UAE assist you in generating the most precise financial statements for your company in order to compute your exact taxable revenue.
You may also need to make adjustments to finalize the Taxable Income for the applicable Tax Period. For example, you must consider the corporate tax exempted income as well as the expenditures that are entirely or partially non-deductible for corporate tax purposes.
Adjust these income/expenses:
- Eliminate unrealized capital profits/capital receipts laid to the Profit & Loss account
- Reject 50% expenses towards entertainment for customers, shareholders, producers, and business partners
- Official penalties, restorable VAT, donations to an unauthorized charity
- Expenses pertaining to exempted income
How Can BMS Help You?
BMS Auditing has professionals who have extensive expertise in calculating Corporate Tax for Mainland and Free Zone businesses. There are tax consultants who are ready to assist you in calculating the Corporate Tax.
Need Help with Corporate Tax? Clueless about assessing the Final Taxable income? Call us for assistance!
