Corporate Tax Computations for UAE Mainland Companies

Preparing corporate tax computations for UAE mainland companies doesn’t have to feel scary. Once you understand the logic, it becomes a repeatable routine: start from your financial statements, adjust for UAE Corporate Tax rules, then calculate the tax & file on time.

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So, what’s the big picture? You take your accounting profit, make corporate tax adjustments (remove exempt income, add back non-deductible expenses, apply tax losses and eligible reliefs), and arrive at taxable income. After that, you apply the UAE corporate tax rates: 0% on taxable income up to AED 375,000 and 9% above AED 375,00

Also, don’t forget the deadline: the FTA requires filing and payment within 9 months from the end of the Tax Period.

1) Start with the basics (before you touch the numbers)

Firstly, confirm these three items:

Your Tax Period

Most mainland companies use their financial year as the Tax Period (for example, 1 Jan to 31 Dec). That period drives everything: bookkeeping cutoff, computation, and deadline.

Your deadline

Next, note the filing and payment rule: within 9 months after the Tax Period ends. Your tax rate

Finally, confirm the standard rates for most businesses:

0% on taxable income up to AED 375,000
9% on taxable income above AED 375,000

2) What a corporate tax computation really is

A UAE Corporate Tax computation is basically a “bridge” between accounting and tax.

Accounting Profit (financial statements)

plus/minus Corporate Tax adjustments
equals Taxable Income
apply tax rate
equals Corporate Tax Payable

So, rather than guessing, you build a clear calculation that you can explain, defend, and update later. Get details on Accounting for DPC Companies.

3) Step-by-step: How to prepare corporate tax computations (mainland companies)

Step 1: Close your books properly

Before anything else, clean bookkeeping matters. So, reconcile:

Bank and cash
VAT control accounts
Trade receivables/payables
Accruals and prepayments
Payroll and EOSB provisions (where relevant)
Fixed assets schedule (additions, disposals, depreciation)

If you skip this, you’ll waste time later fixing “tax issues” that are actually accounting issues.

Step 2: Start from accounting profit (not cash in bank)

Secondly, take the profit/loss from your financial statements as your starting point. Use the final signed-off number (or at least management accounts that are fully reconciled).

Step 3: Identify exempt income (remove it from taxable income)

Now, check whether you have items that can be exempt income, such as certain dividends (depending on conditions). If income is exempt, you normally exclude it from taxable income.

Practical tip: keep a simple file with dividend vouchers, investee details, ownership proof, and bank credits. It saves headaches. Looking for a Accounting for DIAC Companies?

Step 4: Add back non-deductible expenses (this is where most errors happen)

Here’s the truth: most tax adjustments come from expenses.

Common add-backs include:

A) Entertainment expenses (50% rule)

Client meals, tickets, hospitality, and similar costs usually fall under entertainment expenditure. Under UAE CT rules, you can deduct up to 50% of qualifying entertainment—meaning you add back the other 50%. So, if your accounts show AED 40,000 entertainment, you typically add back AED 20,000.

B) Donations (check if the recipient qualifies)

Donations to entities that are non-qualifying public benefit entities generally aren’t deductible for UAE CT. So, don’t assume “donation = expense = deductible.” Always verify.

C) Expenses linked to exempt income

If a cost directly relates to earning exempt income, you may need to restrict that deduction. Therefore, track these costs instead of mixing them into general overheads.

Step 5: Review interest and finance costs

If your business has loans (bank or shareholder), then interest and finance charges need attention. The UAE has interest deduction limitation rules, so keep a clean schedule of:

lender name
related party or third party
principal amount
interest rate
purpose of funding
interest charged in the year

Even when the business can deduct interest, you still want clear documentation. Get details on Accounting for DSP Companies.

Step 6: Check related-party transactions and transfer pricing

Meanwhile, ask this simple question: “Did we deal with owners, directors, group companies, or sister concerns?”

If yes, document the basis for pricing. In practice, you want agreements, invoices, and a short note explaining why the pricing is fair. This step feels boring, but it protects you later.

Step 7: Apply tax losses correctly (if you have them)

If your company made losses, you may be able to carry them forward and use them in future periods, subject to conditions and limits. So, don’t ignore losses—track them properly year by year.

Step 8: Consider Small Business Relief (if eligible)

This is a big one for smaller mainland companies.

The FTA states you can elect Small Business Relief (per Tax Period) if revenue is ≤ AED 3,000,000 in the current and all previous Tax Periods (and you meet the other listed conditions). If you qualify, it can simplify your CT position for that period. However, you must assess eligibility carefully—don’t “assume” you qualify.

Step 9: Calculate taxable income and corporate tax

After all adjustments, you get taxable income. Then compute tax using the UAE rates (0% up to AED 375,000, 9% above). Looking for a Accounting for IFZA Dubai Companies?

4) Simple corporate tax computation example (mainland company)

Let’s keep it realistic.

Accounting profit: AED 600,000
Client entertainment: AED 40,000
Donation to non-qualifying charity: AED 10,000

Item	What you do	Amount (AED)
Accounting profit	Starting point	600,000
Entertainment	Add back 50% (non-deductible part)	+20,000
Donation	Add back if non-qualifying	+10,000
Taxable income	630,000