How is corporate tax calculated in the UAE?

The corporate tax law in the UAE has changed the tax structure of the country completely. This introduction has led to a hassle in the minds of the people when it comes to the compliance with the rules and regulations. This hassle can be solved when people get the idea of the complete procedure of the corporate tax and how it is calculated. The introduction of corporate tax is a great help to the economy of the country and is bound to help the entrepreneurs operating in the region. 

The tax is said to be applicable from the fiscal years starting from 1st July 2023. It will be applicable on the corporate income of the business and not the personal income of the entrepreneur. The people of the nation have been given a lot of time to make the arrangements for the tax. To avoid any last-minute issues and guarantee a seamless transfer into the new system, it is advised to get help from a business setup consultant for  corporate tax compliance as soon as possible. Everything you need to know about computing corporate tax in the UAE, including the taxable income, tax rates, business-friendly deductions, and exemptions, will be covered in this tutorial.

What are the rates set for the corporate tax in the UAE?

The UAE Ministry of Finance had given a statement in January 2022 that a corporate tax with a standard rate of 9% will be introduced in the UAE. For taxable income up to AED 375,000, the tax rate is set at 0%; for taxable income beyond AED 375,000, there is a 9% tax rate; and for big multinational corporations that meet particular criteria, there is a special tax rate that has not yet been set but is predicted to be 15%. The UAE’s tax structure has undergone major change after this law was introduced as the nation did not have any provision for corporate taxes earlier. The people in the free zone pay 0% on qualifying incomes and 9% on all other incomes.

How is the tax calculated for those who are eligible?

Say Business XYZ’s taxable income for the tax year is 500,000 AED. The company’s gross income is subtracted from the allowable deductions and costs to determine the taxable income.

The standard corporate tax rate are 9%, Business XYZ’s tax obligation would be as follows:

Taxable income: 500,000 AED

Rate of corporate tax: 9%

Tax due is calculated as (Taxable Income – Exempt Amount) x Tax Rate.

Tax payable is equal to (AED 500,000 – AED 375,000) x 0.09, = AED 11,250.

At a 9% tax rate, Business XYZ’s tax obligation for the tax year would be AED 11,250.

It is important to keep in mind that this is an example and in cases where the payable tax is being calculated, it is advisable to take help from a business setup consultant in the UAE to ensure that all the calculations are correctly done and that you are complying with the rules.

What would be the costs of getting help from a consultant?

The cost of the services vary based on your needs. Enter your details in the RadiantBiz cost calculator and get the cost of the services you need. You can then plan your budget and proceed accordingly.

How can RadiantBiz help in calculating the corporate tax in the UAE?

Companies can receive assistance and direction from a company setup specialist like RadiantBiz regarding corporation taxes in various nations. We can assist your business in developing a tax-paying plan and understanding the rules and legislation pertaining to taxes in the United Arab Emirates.

Our experts have immense experience in their fields and work tirelessly to ensure that your dream business gets all the help it needs to realise its full potential and reach the height it deserves. Their years of experience adds to their knowledge and lets them devise a plan to help the unique needs of your company and get you a tailor made strategy to help you get ready for the steps to take next for your business.

Overall, we at RadiantBiz are among the most well-known business setup Consultant in UAE and can offer your firm invaluable knowledge and guidance regarding corporate taxes in the nation, assisting them in navigating the intricate and constantly-evolving world of international taxation. Make an appointment with one of our specialists right now to get going.