Taxable Income Calculation UAE: From Profit to Tax | HelloBooks Step through the UAE taxable income calculation: start from accounting income, remove exempt items, add back non-deductible costs, cap interest, apply losses.
UAE corporate tax is charged on taxable income, and taxable income starts from the accounting profit in your financial statements. Article 20 of the law then lists adjustments: some income comes out, some costs go back in, interest is capped and losses are relieved within limits. This guide follows a sample Abu Dhabi services company through each step so you can see where the numbers move.
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Article 20(2) says taxable income for a period is the accounting income for that period, adjusted as the law requires, and Article 20(1) expects adequate standalone financial statements. Where the law conflicts with accounting standards, the law prevails. Clean books matter here, because every later adjustment builds on this figure.
Our sample company reports accounting profit of AED 1,450,000 for 2025.
These are the adjustments most small and mid-sized businesses meet:
The sample company spent AED 80,000 on client entertainment, so AED 40,000 is added back. It paid an AED 15,000 traffic and municipality fine, added back in full. It received a AED 60,000 dividend from a UAE subsidiary, which is removed. Taxable income becomes AED 1,450,000 + 40,000 + 15,000 − 60,000 = AED 1,445,000.
If the company carries tax losses, Article 37 lets it offset them against up to 75% of that period's taxable income, provided the ownership continuity conditions in Article 39 are met. With no losses, tax is 9% of AED 1,070,000 (the amount above AED 375,000), which is AED 96,300.
Most adjustments are only as reliable as the account they sit in. The HelloBooks AI agent posts entertainment, fines and owner payments to separate accounts as it records bills, so the add-backs are a report rather than a hunt. Ask "list every expense we might need to add back for corporate tax" and it returns the entries with attachments. Your accountant decides the final treatment and signs off the computation. If your firm uses its own adjustment codes, we can map them into the chart of accounts on request at /book-a-demo.
Tax guide · Corporate tax
Tax guide · Corporate tax
Tax guide · Corporate tax
Plain-English guides to UAE tax rules, each checked against official sources.
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