UAE Corporate Tax Calculator 2025 – Calculate Business Tax Online (FTA Approved)

What is Corporate Tax in UAE

Corporate Tax (CT) is a form of direct tax levied on the net income or profit earned by corporations, businesses, and other juridical persons from their business activities. In the United Arab Emirates, corporate tax was officially introduced through Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, which came into effect for financial years starting on or after June 1, 2023.

The UAE corporate tax represents a strategic shift in the country's taxation landscape. Previously, most businesses operating in the UAE mainland enjoyed a tax-free environment, with corporate taxation primarily limited to foreign banks and oil companies. The new federal corporate tax regime marks the UAE's commitment to international tax transparency standards and aligns with global efforts to prevent base erosion and profit shifting (BEPS) as outlined by the OECD.

UAE Corporate Tax Rates Overview

Who is Subject to UAE Corporate Tax?

Corporate tax applies to a wide range of entities and individuals conducting business activities in the UAE:

• UAE Companies and Corporations: All juridical persons incorporated or effectively managed in the UAE, including Limited Liability Companies (LLCs), Public and Private Joint Stock Companies, and partnerships
• Free Zone Businesses: Entities established in UAE free zones, with qualifying free zone persons eligible for 0% rate on qualifying income
• Natural Persons (Individuals): Individuals conducting business activities under a commercial license or trade name, including sole proprietorships
• Foreign Juridical Persons: Non-resident entities with a permanent establishment in the UAE or deriving UAE-sourced income
• Unincorporated Partnerships: Partnerships not treated as separate juridical persons, where partners are individually taxed

Entities Exempt from Corporate Tax

Certain entities and activities are exempt from UAE corporate tax:

• Natural Resource Extraction: Businesses engaged in extraction of natural resources remain subject to Emirate-level taxation
• Government Entities: Government bodies, government-controlled entities, and wholly government-owned companies
• Qualifying Public Benefit Entities: Charitable organizations, pension and social security funds meeting specific criteria
• Qualifying Investment Funds: Investment funds meeting regulatory and operational requirements set by competent authorities
• Small Business Relief: Businesses with revenue not exceeding AED 3 million may elect for small business relief and pay zero corporate tax

Corporate Tax Calculation Formulas

Understanding the formulas for calculating UAE corporate tax is essential for accurate tax planning and compliance. The Federal Tax Authority prescribes specific methods for determining taxable income and computing tax liability under Federal Decree-Law No. 47 of 2022.

Step 1: Calculate Taxable Income

Corporate tax is not calculated directly on accounting profit. Instead, businesses must make specific adjustments to arrive at taxable income:

Common Tax Adjustments Include:

• Add-backs (Increase Taxable Income): Non-deductible expenses, entertainment expenses exceeding limits, fines and penalties, personal expenses, depreciation differences, provisions not meeting tax requirements
• Deductions (Decrease Taxable Income): Tax depreciation allowances, carried-forward losses from previous years, exempt income (dividends from qualifying shareholdings), capital gains from disposing of qualifying participations

Step 2: Determine Applicable Tax Rate

Once taxable income is calculated, the appropriate tax rate is applied based on the income threshold:

Step 3: Calculate Corporate Tax Liability

The UAE corporate tax system uses a tiered approach where only income exceeding the threshold is taxed at 9%:

Calculation Examples

Special Cases: Small Business Relief

Effective Tax Rate Calculation

Uses of Corporate Tax Calculator

A corporate tax calculator is an essential financial planning tool for businesses operating in the UAE. Understanding when and how to use this calculator helps ensure accurate tax planning, compliance with Federal Tax Authority requirements, and informed business decision-making.

For Business Owners and Entrepreneurs

• Tax Planning and Budgeting: Estimate annual corporate tax liability to allocate sufficient funds for tax payments and avoid cash flow disruptions
• Business Structure Decisions: Compare tax implications of different business structures (LLC, free zone company, branch) before incorporation
• Profitability Analysis: Calculate after-tax profit to understand the true financial performance and return on investment
• Pricing Strategy: Factor in corporate tax costs when setting product or service prices to maintain desired profit margins
• Investment Decisions: Assess the tax impact of major business investments, expansions, or acquisitions
• Dividend Planning: Determine available profits for distribution to shareholders after accounting for corporate tax obligations

For Accountants and Tax Professionals

• Tax Return Preparation: Calculate accurate tax liabilities when preparing corporate tax returns for FTA submission
• Quarterly Tax Estimates: Provide clients with quarterly tax projections to facilitate advance tax planning and payment schedules
• Tax Reconciliation: Reconcile accounting income with taxable income by applying appropriate tax adjustments and calculating resulting liability
• Scenario Analysis: Model different business scenarios (revenue growth, expense changes) to show tax implications to clients
• Compliance Verification: Verify that calculated tax amounts align with FTA guidelines and legislative requirements
• Loss Carry-Forward Planning: Calculate optimal utilization of tax losses from previous years to minimize current tax liability

For CFOs and Finance Managers

• Financial Forecasting: Incorporate accurate tax estimates into financial projections and business forecasts
• Cash Flow Management: Plan for tax payment deadlines by estimating quarterly or annual tax obligations
• Variance Analysis: Compare actual tax liability against budgeted amounts to identify and explain variances
• Earnings Reports: Calculate tax provisions for financial statements and earnings announcements
• Transfer Pricing: Assess tax implications of inter-company transactions and transfer pricing policies
• Tax Optimization: Identify opportunities to reduce tax liability through legitimate tax planning strategies

For Startups and SMEs

• Threshold Monitoring: Track when taxable income approaches the AED 375,000 threshold to plan for 9% tax rate application
• Small Business Relief Assessment: Evaluate eligibility for small business relief (revenue ≤ AED 3 million) and calculate potential tax savings
• Growth Planning: Understand how business growth will impact tax obligations as revenue and profits increase
• Investor Presentations: Provide investors with after-tax profitability projections showing realistic returns
• Break-Even Analysis: Incorporate corporate tax into break-even calculations to determine true profitability requirements

For Free Zone Companies

• Qualifying Income Calculation: Separate qualifying income (0% rate) from non-qualifying income (9% rate) for tax purposes
• Mainland Business Assessment: Calculate tax impact if expanding operations to UAE mainland or conducting non-qualifying activities
• Compliance Monitoring: Ensure adherence to free zone requirements to maintain 0% corporate tax status
• De-Minimis Rule Application: Calculate whether de-minimis threshold for non-qualifying income is exceeded

For International Businesses

• Permanent Establishment Analysis: Calculate tax liability for foreign companies with UAE permanent establishments
• Global Tax Planning: Compare UAE corporate tax rates with other jurisdictions for optimal regional structuring
• Transfer Pricing Compliance: Calculate arm's length taxable income for cross-border related party transactions
• BEPS Pillar Two: Assess whether UAE operations meet minimum tax thresholds under OECD guidelines

How to Use This Calculator

Our UAE Corporate Tax Calculator is designed to provide quick and accurate estimates of your corporate tax liability based on the official Federal Tax Authority rates and calculation methods. Follow these steps to calculate your tax obligation:

Step-by-Step Instructions

1. Enter Your Accounting Income / Net Profit: Input your business's net profit as shown in your audited financial statements or management accounts. This is your total revenue minus all business expenses before any tax adjustments. Enter the amount in UAE Dirhams (AED).
2. Add Tax Adjustments: Enter the total net tax adjustments required to convert accounting income to taxable income. This includes add-backs (enter as positive numbers) such as non-deductible expenses, and deductions (enter as negative numbers) such as tax depreciation differences. If you have no adjustments, leave this as zero.
3. Select Business Relief Type: Choose the appropriate relief option from the dropdown:
   • No Relief: Standard corporate tax calculation applies
   • Small Business Relief: Select if your total revenue does not exceed AED 3 million and you elect to apply small business relief (results in 0% tax)
   • Qualifying Free Zone Person: Select if you are a qualifying free zone entity meeting all compliance requirements (eligible for 0% rate on qualifying income)
4. Click Calculate Corporate Tax: Press the calculation button to instantly see your tax liability breakdown.
5. Review Your Results: The calculator displays a comprehensive breakdown showing your accounting income, tax adjustments, final taxable income, applicable tax rate, and total corporate tax payable.

Understanding Your Results

The calculator provides the following information:

• Accounting Income: Your original net profit before tax adjustments
• Tax Adjustments: Total adjustments applied (positive for add-backs, negative for deductions)
• Taxable Income: Final income amount on which corporate tax is calculated
• Tax Rate Applied: Shows whether 0% (below threshold or with relief) or 9% rate applies
• Corporate Tax Payable: Total amount of corporate tax you owe to the Federal Tax Authority

Important Considerations When Using the Calculator

Common Tax Adjustments to Consider

Add-backs (Increase Taxable Income):

• Entertainment expenses exceeding regulatory limits
• Fines, penalties, and sanctions paid
• Provisions for doubtful debts not meeting FTA criteria
• Personal expenses of owners charged to business
• Depreciation in excess of tax allowances
• Non-arm's length related party expenses

Deductions (Decrease Taxable Income):

• Tax depreciation allowances (if different from accounting depreciation)
• Carried-forward losses from previous tax periods
• Exempt dividends from qualifying shareholdings
• Capital gains from disposal of qualifying participations
• Specific tax reliefs and incentives

How This Calculator Works

Our UAE Corporate Tax Calculator uses the exact calculation methodology prescribed by the Federal Tax Authority under Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (as amended by Federal Decree-Law No. 60 of 2023). Understanding the methodology ensures transparency and helps you verify the accuracy of calculated results.

Calculation Methodology Breakdown

Step 1: Capture Input Values

The calculator first captures three key inputs from the user:

• Accounting Income (Net Profit from financial statements)
• Tax Adjustments (net amount of add-backs and deductions)
• Relief Type (No Relief, Small Business Relief, or Free Zone Status)

Step 2: Calculate Taxable Income

Step 3: Apply Relief Eligibility Checks

Before calculating tax, the calculator checks if any relief applies:

• Small Business Relief: If selected, corporate tax is set to zero regardless of taxable income (assumes business meets AED 3M revenue threshold)
• Free Zone Status: If selected, corporate tax is set to zero (assumes business is a qualifying free zone person)
• No Relief: Proceeds to standard rate calculation

Step 4: Determine Tax Rate Based on Threshold

For businesses without relief, the calculator applies the two-tier rate structure:

Step 5: Calculate Corporate Tax Liability

The final tax calculation uses this formula:

Step 6: Display Results with Breakdown

The calculator presents a comprehensive breakdown showing:

• Original accounting income
• Applied tax adjustments
• Calculated taxable income
• Applicable tax rate (0% or 9%)
• Final corporate tax liability

Mathematical Verification Example

Accuracy and Compliance Features

The calculator ensures accuracy through several mechanisms:

• Threshold Enforcement: Automatically applies 0% rate to income up to AED 375,000 and 9% only to excess
• Precision Rounding: All currency amounts are rounded to two decimal places following standard accounting practices
• Negative Value Handling: Prevents negative tax calculations; if taxable income is negative (loss position), tax is displayed as zero
• Relief Application: Correctly applies zero tax when small business relief or free zone status is selected
• Input Validation: Requires valid numeric inputs and prevents calculation with missing or invalid data

Legislative Compliance

All formulas and calculation methods are derived from:

• Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses
• Federal Decree-Law No. 60 of 2023 (amendments to corporate tax law)
• Cabinet Decision No. 100 of 2022 on the Executive Regulations of Corporate Tax
• Federal Tax Authority Corporate Tax Guides and Public Clarifications
• Ministry of Finance official corporate tax framework documentation

Calculation Limitations

While this calculator provides accurate estimates, it does not account for:

• Complex group restructuring provisions
• Transfer pricing adjustments for international transactions
• Specific industry exemptions or special tax regimes
• Tax credits or withholding tax credits
• Detailed loss carry-forward and carry-back rules
• Foreign tax relief mechanisms
• OECD Pillar Two minimum tax calculations for large multinationals

For complex scenarios involving these factors, consultation with a licensed tax advisor or the Federal Tax Authority is recommended.

Frequently Asked Questions