Question 1

Q-1. How to calculate Corporate Income Tax provision?

Accepted Answer

The Corporate income tax provision in the UAE is calculated based on a company's accounting net profit (or loss) as reported in its financial statements. It should be prepared by International Financial Reporting Standards (IFRS) or similar accepted standards.

Net profit adjustments: Adjustments are made to the net profit to determine the taxable income.
Tax rates applied:

0% tax on income up to AED 375,000
9% tax on income exceeding AED 375,000

Example:

Taxable income: AED 500,000
The 9% tax applies only to the income exceeding AED 375,000 (i.e., AED 125,000).
Tax Calculation: 9% of AED 125,000 = AED 11,250.

Question 2

Q-2 How to compute Corporate Tax?

Accepted Answer

Start with net profit and apply adjustments for exempt income and non-deductible expenses.

Begin with the net profit as per the financial statements.
Adjust for exempt income (e.g., qualifying dividends) and non-deductible expenses (e.g., personal expenses, fines).
The resulting figure is the taxable income.
Tax rates:

0% for income up to AED 375,000
9% for income exceeding AED 375,000

Question 3

Q-3. How to register for Corporate Tax in UAE?

Accepted Answer

Register via FTA’s EmaraTax portal with the necessary documents.

Create an account or log in to EmaraTax.
Select the "Register for Corporate Tax" option.
Provide documents:

Trade license
Emirates ID/Passport of the applicant or authorized signatory
Proof of authorization for the signatory

Estimated registration time: 30 minutes
FTA processing time: Around 20 business days

Question 4

Q-4. How much Corporation tax will I pay?

Accepted Answer

Tax depends on taxable income, with a 9% rate on income above AED 375,000.

0% for taxable income up to AED 375,000.
9% for income exceeding AED 375,000.
Example: Taxable income of AED 700,000 = Tax on AED 325,000 = AED 29,250

Large multinational enterprises may face a 15% Domestic Minimum Top-Up Tax.

Question 5

Q-5. How to file a Corporation Tax return online?

Accepted Answer

The Corporation Tax return online filing is mandatory in the UAE and must be done through the Federal Tax Authority's (FTA) EmaraTax portal. The platform features an active form where taxpayers enter financial information, income, expenses, deductions, and tax calculations. Businesses must prepare their financial statements (ideally audited and IFRS-compliant) and ensure all necessary details are accurately updated before submitting the return.

Question 6

Q-6. What is the Corporation Tax calculator?

Accepted Answer

A Corporation tax calculator can help businesses estimate their potential Corporate Tax liability in the UAE. These tools typically ask for expected annual revenue and profit, and then apply the tiered tax rates (0% for profits up to AED 375,000, and 9% for profits above this amount) to provide an estimated tax payable. While useful for visualization, it is always recommended to consult a tax advisor for precise calculations and personalized financial advice.

Question 7

Q-7. What is the Corporation Tax return guide?

Accepted Answer

The UAE's Federal Tax Authority (FTA) has released a comprehensive Corporation tax return guide to provide clarity on the compliance and reporting obligations for taxable persons. This guide details how to complete and file the Corporate Tax return online via the EmaraTax portal, outlining the required information, schedules, and attachments. It emphasizes the importance of accurate financial records and timely preparation to avoid penalties.

Question 8

Q-8. Explain the Corporation tax calculation example

Accepted Answer

Consider a company with a taxable income of AED 475,000. To perform the Corporation tax calculation example:

The first AED 375,000 of taxable income is taxed at 0%.
The remaining amount, AED 475,000 - AED 375,000 = AED 100,000, is taxed at the standard rate of 9%.
Therefore, the Corporate Tax payable would be 9% of AED 100,000, which equals AED 9,000.

Question 9

Q-9. What expenses are deductible for Corporation Tax purposes in the UAE?

Accepted Answer

Corporation tax expenses refer to the costs a business can deduct from its total income to reduce its taxable income. Under UAE Corporate Tax law, expenses must be "wholly and exclusively" incurred for business purposes to be deductible.

Common deductible expenses include operating costs (rent, utilities)
Employee salaries and benefits
Business travel, interest on business loans
Research and Development (R&D) costs

Proper documentation is crucial for claiming these deductions.

Question 10

Q-10. What are disallowable expenses for Corporate Tax purposes in the UAE?

Accepted Answer

Disallowable expenses for Corporation tax are costs that businesses cannot deduct from their taxable income when calculating their Corporate Tax liabilities. These typically include:

Personal expenditures of the business owner or employees
Fines and penalties imposed by regulatory bodies
Non-business-related entertainment expenses

While capital expenditures (large investments in assets) are generally non-deductible in their entirety, their depreciation over time may be eligible for deduction. Entertainment expenses are specifically limited to 50% deductibility.

Question 11

Q-11. How to get Corporation tax help?

Accepted Answer

For Corporation tax help in the UAE, businesses can seek assistance from professional Corporate Tax consultants and advisors. These experts provide in-depth knowledge of tax laws:

Tax planning and compliance
Identify opportunities to reduce tax burdens
Assist with the accurate and timely filing of returns.

They can also represent businesses during tax audits and provide ongoing support to ensure continuous compliance with evolving regulations.

Corporate Tax Services in the UAE

Frequently Asked Questions (FAQs)

Why Choose SafeLedger ?

100% Compliant

1-Day Delivery

Fully Online

Expert Drafting

Business Setup Across All Zones in UAE

Related Services

Blogs