🔹 Scenario
- Company name: ABC Trading LLC
- Location: UAE mainland
- Financial year: 2024
- Accounting profit (before tax): AED 500,000
🧮 Step-by-Step Tax Calculation
1️⃣ Determine taxable income
Assume:
- No exempt income
- No disallowed expenses
- Taxable income = AED 500,000
2️⃣ Apply UAE corporate tax rates
UAE corporate tax rates are:
- 0% on first AED 375,000
- 9% on income above AED 375,000
3️⃣ Calculate tax
| Portion of Income | Tax Rate | Tax Amount |
|---|---|---|
| First AED 375,000 | 0% | AED 0 |
| Remaining AED 125,000 | 9% | AED 11,250 |
👉 Total corporate tax payable = AED 11,250
✅ Final Result
- Profit: AED 500,000
- Corporate tax: AED 11,250
- Effective tax rate: ~2.25%
📌 Another Quick Example (Small Business)
- Net profit: AED 300,000
- Since it’s below AED 375,000 →
👉 Corporate tax = 0
⚠️ Important Notes
- Applies to financial years starting on or after 1 June 2023
- Applies to mainland companies & most free zone companies
- Free Zone companies may still get 0% if they qualify as Qualifying Free Zone Persons
- This is separate from VAT
