Regime
Tool
Dubai corporate tax and VAT calculator
Two questions come up as soon as the company is trading: how much corporate tax on this level of profit, and whether you need to register for VAT. The two calculators below answer them with assumptions you can read, challenge and replace, one by one.
The short answer
Above the taxable income threshold, the rate is 9%. Below it, the rate is 0%, and the schedule is marginal: going one dirham over the threshold costs tax on that dirham, not on your whole profit. On the VAT side, registration becomes mandatory when taxable revenue over a rolling twelve months crosses the threshold, and remains available as an option above a lower threshold.
The calculation itself takes a few seconds. The real work lies elsewhere: establishing taxable income, which is not your accounting profit, and classifying each revenue stream. That is where the gaps arise, and it is what a calculator cannot do for you.
Estimate your corporate tax
The schedule is marginal: only the part of taxable income above the threshold is taxed. A company that earns one dirham more than the threshold pays tax on that dirham, not on its whole profit. The effective-rate curve shows exactly that.
- Income treated as qualifying
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- Taxable base above the threshold
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- Estimated corporate tax
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- Effective rate on taxable income
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Check your VAT position
Registration is tested on a rolling twelve months, not on a financial year. And not all revenue counts: exempt supplies stay outside the thresholds, while zero-rated supplies and exports count towards them despite a 0% rate.
- Revenue counted towards the thresholds
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- Output VAT over 12 months
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- Filing frequency
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An estimate produced in your browser from the values above. No data is sent anywhere. This is not a tax computation: read ‘What this calculator does not tell you’ before you base a decision on it.
Free zone
What qualifying income means, and why it is not automatic
A company registered in a free zone is not taxed at 0% for that reason alone. The regime applies to a specific category of taxpayer — the Qualifying Free Zone Person — and it covers a category of income, not the entity as a whole. The same company can have qualifying and non-qualifying income in the same financial year.
The conditions are cumulative. In practice, they come down to six requirements:
- real substance in the UAE: people, premises and expenditure in proportion to the declared activity. A registered address is not enough, and this is where applications fail most often;
- income from activities on a closed list set by Cabinet Decision, or from transactions with other free zone persons;
- compliance with a limit on non-qualifying income — the ‘de minimis’ test;
- audited financial statements;
- a transfer pricing policy that is applied and documented for transactions with related parties, including the director’s remuneration and intra-group recharges;
- no election to be taxed under the standard regime.
This is not a status you obtain once and for all. It is tested every tax period. A missed condition in one year removes the regime, and the loss is not limited to that year: it also applies to a number of subsequent periods set by the law. That is why the field ‘share of taxable income that is qualifying income’ is set to zero by default in the calculator. A default of one hundred would show zero tax to a reader who has never checked their eligibility.
The corollary is more reassuring: a free zone company that does not claim the status is not penalised for it. It is taxed exactly like a mainland company, 0% band included. The address does not determine the regime — the activity, the substance and the counterparties do.
VAT
The type of supply changes what counts towards the thresholds
Four types of supply, two consequences each: what you charge the customer, and what you can recover on your purchases. The third consequence, the one that triggers the obligation, is whether the supply counts towards the thresholds or not.
| Type of supply | VAT charged to the customer | Counts towards the thresholds | Input VAT recoverable |
|---|---|---|---|
| Standard-rated | Charged at 5% | Yes | Yes |
| Zero-rated | Charged at 0% | Yes | Yes |
| Exempt | No VAT charged | No | No |
| Exports outside the GCC | Charged at 0% | Yes | Yes |
Scroll the table sideways to see every column.
The most expensive gap lies between zero-rated and exempt. In both cases the customer pays no VAT, and many business owners conclude that they are the same thing. They are not. A zero-rated supply counts towards the thresholds and gives the right to recover the VAT paid on your purchases; an exempt supply does neither, and your suppliers’ VAT then becomes a final cost.
Two practical consequences. A company that thinks it is exempt when it is zero-rated registers late. A company that thinks it is zero-rated when it is exempt recovers VAT it will have to pay back. In both cases, putting it right costs more than asking the question at the right time.
Two mechanisms the calculator does not quantify, but which you need to keep in mind. The voluntary threshold can also be crossed through your taxable expenses, not only your revenue — so a company still investing can register before its first dirham of revenue. And the reverse charge makes you liable for VAT on certain services received from abroad and on imports, even when all your sales are zero-rated.
Transparency
Method and assumptions
Corporate tax. The calculator deducts the threshold from the taxable income you enter, applies the rate to what remains, and divides the tax by the starting income to give the effective rate. For a free zone entity, it first separates the qualifying share from the non-qualifying share, applies the relevant rate to each, then adds them up. A free zone entity entered with zero per cent qualifying income is treated as an ordinary company, threshold included.
VAT. The revenue you enter is first filtered by type of supply — exempt supplies drop out — then compared with the two thresholds. Output VAT is only calculated on supplies that are actually taxed. The filing frequency switches from quarterly to monthly above the revenue threshold shown, which is only a general rule: the Federal Tax Authority assigns tax periods business by business.
What the two calculators share. The revenue entered in the second is used by the first to test two things: Small Business Relief and the free zone de minimis test. A business owner who works out corporate tax without looking at revenue misses the two regimes that can bring it down to zero — or cost the company its status.
Status of the values. None of the values below is published as verified. They are working values, logged in our internal register as ‘to be verified’, and the calculator lets you replace them with the ones your adviser confirms. A calculator that hid a rate would be a calculator nobody could check.
| Assumption | Working value | Status |
|---|---|---|
| Corporate tax rate | 9% | To be verified |
| Taxable income taxed at 0% up to | AED 375,000 | To be verified |
| Rate on qualifying free zone income | 0% | To be verified |
| 0% band applied to the non-qualifying income of a Qualifying Free Zone Person | Not applied by default | To be verified |
| Small Business Relief revenue cap | AED 3,000,000 | To be verified |
| End of Small Business Relief | Tax periods ending on or before 31 December 2026 | To be verified |
| De minimis test on non-qualifying revenue | 5% of revenue | To be verified |
| Absolute cap of the de minimis test | AED 5,000,000 | To be verified |
| Corporate tax return filing | 9 months after the end of the tax period | To be verified |
| Standard VAT rate | 5% | To be verified |
| Mandatory VAT registration threshold | AED 375,000 | To be verified |
| Voluntary VAT registration threshold | AED 187,500 | To be verified |
| Switch to monthly VAT returns | AED 150,000,000 | To be verified |
| VAT return filing and payment | 28 days after the tax period | To be verified |
| Registration after crossing the threshold | 30 days | To be verified |
Scroll the table sideways to see every column.
Limits
What this calculator does not tell you
The result shown is an estimate. It is not a tax computation, it is not a return, and it is not advice. Here, plainly, is what it leaves out entirely.
- It does not calculate your taxable income. It accepts the figure you enter. Tax adjustments, non-deductible expenses, provisions, depreciation, the limit on interest deductions, tax losses carried forward: all of this happens before you reach the input field, and that is where most of the gap lies.
- It ignores transfer pricing and related parties. Director’s remuneration, intra-group recharges, shareholder loans, assets made available: these transactions must be priced as between independent parties and documented. An adjustment here moves the taxable base far more than the rate does.
- It does not handle any group situation. Tax groups, the participation exemption, controlled foreign companies, a permanent establishment in the UAE or elsewhere, the rules for very large multinational groups: none of these regimes is modelled.
- It does not calculate net VAT. It shows output VAT, not input VAT, so not what you will actually pay. It ignores the reverse charge, imports, adjustments and tax credits carried forward.
- It assumes a twelve-month tax period. A longer or shorter first period, a change of year-end or a cessation during the year changes both the base and the deadlines.
- It does not quantify any penalty. The principle is stated; the amounts are revised, and we give you the current figures when they concern you.
- It says nothing about your personal tax position, nor about that of the country you are leaving. That is the subject of the next section.
Your home country
If you are tax resident outside the UAE
The amount shown above is a UAE tax. It says nothing at all about what you may owe in your home country. The two systems coexist, and the way they interact is the point most often misunderstood.
Three points, in the order they arise. Tax residence is proved, not declared. It is assessed on objective facts, and a UAE residence card does not settle it on its own. Place of effective management counts as much as the registered office. A company registered in the UAE but actually run from another country may be treated as taxable there. Leaving your home country’s tax system has its own formalities, and the tax rules of that country decide what they cost.
Where a tax treaty exists between your home country and the UAE, it allocates the right to tax. It removes neither your home-country filing obligations nor the review of your personal situation. Your home country’s rates, thresholds and allowances are a matter for your tax adviser there; what we calculate here is the UAE side of the structure.
Deal with this before, not after
A structure set up before the question of tax residence is settled is hard to repair. Have your position confirmed by a tax adviser in your home country and by us before you file the licence application. That is the least expensive sequence.
Frequently asked questions on corporate tax and VAT
At what level of profit does a company pay corporate tax?
Above the taxable income threshold used in the calculator, AED 375,000 as a working value. Below it, the rate is 0%. The schedule is marginal: only the part above the threshold is taxed, so the effective rate rises gradually towards the headline rate without ever reaching it.
Is a free zone company really taxed at 0%?
Only on its qualifying income, and only if it meets every condition of the status: real substance in the UAE, activities on a closed list, compliance with the de minimis test, audited financial statements and documented transfer pricing. The rest of its income is taxed at the full rate. The address does not determine the regime.
Is taxable income the same as my accounting profit?
No, and it is the most expensive gap in the whole system. Taxable income is reached after adjustments: non-deductible expenses, provisions, depreciation, interest, related-party transactions brought to an arm’s length price, and tax losses carried forward. The calculator takes the figure you give it; it does not work it out.
Do I have to register for VAT as soon as the company is set up?
Not necessarily. Registration becomes mandatory when taxable revenue over a rolling twelve months crosses the threshold, and it remains available as an option above a lower threshold. The test also looks ahead: a signed contract that will take you over the threshold within the next thirty days already triggers the obligation.
Do exempt supplies count towards the VAT threshold?
No, and this is the most common confusion. An exempt supply does not count towards the thresholds and gives no right to recover input VAT. A zero-rated supply charges no VAT either, but it does count towards the thresholds and does give the right to recover input VAT. The two regimes only look alike from a distance.
Does Small Business Relief apply automatically?
No. It is an election: you claim it tax period by tax period, and it has a price — you give up carrying forward certain tax losses. It is also time-limited by the text that introduced it. We check that your tax period is still covered before taking it into account.
I am tax resident in another country: does this calculation settle my position?
No. It estimates UAE tax and nothing else. Your personal tax depends on your tax residence, which has to be proved rather than declared, and on any tax treaty between your country and the UAE. A UAE company managed from another country may be treated there as having its place of effective management.
What does a company risk if it files its return late?
Penalties, whose amounts are revised from time to time; we give you the current figures when they concern you. The principle does not change: the corporate tax return is due even when no tax is payable, and late VAT registration is penalised regardless of the amount of tax eventually due.
Independent advice
Have this estimate checked before your first return
Send us your figures and your assumptions. We go through the step from accounting profit to taxable income and how each revenue stream is classified, and we tell you what holds up and what does not.