The UAE federal tax on business profits, charged at 9 percent on taxable income above AED 375,000.
Corporate tax is the UAE federal tax on business profits. The standard rate is 9 percent on taxable income above AED 375,000, with 0 percent below that threshold. It applies to mainland companies and, subject to qualifying conditions, to free zone entities, and it requires registration, annual filing and audited or well-kept financial statements.
It matters because corporate tax is calculated from accounting profit with adjustments, which means the quality of the ledgers now has a direct tax consequence. Businesses that could get by on cash-basis bookkeeping under VAT alone cannot do so under corporate tax. Related-party transactions and transfer pricing documentation add further record-keeping duties.
In an ERP project, make sure the chart of accounts separates deductible and non-deductible items cleanly, that fixed assets and depreciation are tracked in the system, and that intercompany dealings are tagged. A system that closes months properly makes the annual corporate tax computation a reporting exercise rather than a reconstruction.
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