Definition

Taxable Profit is the final amount of income on which a UAE company pays Corporate Tax, after adjusting its accounting profit for non-deductible expenses, exempt income, and tax-specific adjustments.

Key points

• Based on IFRS accounting profit.
• Non-deductible items (like fines or donations) are added back.
• Exempt items (like qualifying dividends) are subtracted.
• The standard tax rate is 9% on taxable profit exceeding AED 375,000.

Practical example

A company reports AED 1,200,000 accounting profit but adds back AED 100,000 in non-deductible costs. The taxable profit is AED 1,300,000, and Corporate Tax is calculated on that amount.

Why it matters

Determining taxable profit correctly ensures the right Corporate Tax amount and compliance with FTA rules.