Corporate Tax Calculator
Simplify your corporate tax calculations with the Corporate Tax Calculator, a free online tool. Determine taxable income, apply the corporate tax percentage, and accurately assess your payable tax. Streamline financial management and ensure compliance effortlessly.
How to Calculate Corporate Tax
Net Profit (a): Enter the net profit amount in this field. This represents the total profit earned by the corporation before any deductions.
Less Deductions (b): Enter the deduction amount in this field. This represents the total deductions applied to the net profit.
Exempted Amount (d): Enter the exempted amount in this field. This represents the portion of the net income that is exempt from taxation.
Corporate Tax Percentage: Enter the desired corporate tax percentage in this field. This represents the percentage at which the taxable income will be taxed.
Calculate Corporate Tax: Click the “Calculate Corporate Tax” button to compute the corporate tax based on the provided inputs.
Taxable Income: Once you click the “Calculate Corporate Tax” button, the tool will display the taxable income, which is calculated by subtracting the deductions and exempted amount from the net profit.
Payable Corporate Tax: After calculating the taxable income, the tool will display the payable corporate tax. This amount is determined by applying the corporate tax percentage to the taxable income.
Using these step-by-step instructions, you can easily calculate the corporate tax by inputting the necessary details and clicking the “Calculate Corporate Tax” button. The tool will provide the taxable income and payable corporate tax based on the given inputs and the specified corporate tax percentage.
Please note that this tool is designed to simplify the process of calculating corporate tax and can be used by individuals, corporations, or tax professionals to estimate tax liability accurately.
What is Corporate Tax?
Corporate Tax is a type of direct tax imposed on the net income or profits earned by corporations and other businesses. It is a form of taxation that applies to companies and legal entities, aiming to collect a portion of their earnings for the government. Sometimes referred to as “Corporate Income Tax” or “Business Profits Tax” in certain jurisdictions, Corporate Tax helps generate revenue for the government to fund public services, infrastructure, and other governmental initiatives. The specific rates and regulations governing Corporate Tax vary between countries, and businesses are typically required to file annual tax returns and pay taxes based on their taxable income.
Introduction to corporate Tax
The United Arab Emirates (UAE) has announced the issuance of Federal Decree-Law No. 47 of 2022, known as the “Corporate Tax Law,” on 09 December 2022. This landmark legislation establishes the legal framework for the implementation of a Federal Corporate Tax (referred to as “Corporate Tax”) in the UAE, effective for financial years commencing on or after 1 June 2023.
The introduction of Corporate Tax is a significant step towards realizing the UAE’s strategic objectives, fostering accelerated development, and driving transformation. By providing a competitive Corporate Tax regime aligned with international standards, complemented by an extensive network of double tax treaties, the UAE aims to solidify its position as a leading global jurisdiction for business and investment. Leveraging best practices from around the world, the UAE Corporate Tax regime embodies internationally recognized and accepted principles, ensuring transparency and clarity of its implications.
Corporate Tax, also referred to as “Corporate Income Tax” or “Business Profits Tax” in other jurisdictions, is a direct tax imposed on the net income of corporations and businesses.
The following entities fall under the purview of Corporate Tax:
- UAE companies and other juridical persons incorporated or effectively managed and controlled in the UAE.
- Natural persons (individuals) engaged in Business or Business Activities in the UAE, as specified in a forthcoming Cabinet Decision.
- Non-resident juridical persons (foreign legal entities) with a Permanent Establishment in the UAE (explained in Section 8).
Juridical persons established in a UAE Free Zone are also subject to Corporate Tax as “Taxable Persons” and must comply with the obligations outlined in the Corporate Tax Law. However, Qualifying Free Zone Persons meeting certain conditions may benefit from a 0% Corporate Tax rate on their Qualifying Income (see Section 14 for the conditions).
Non-resident persons without a Permanent Establishment in the UAE or earning UAE-sourced income unrelated to their Permanent Establishment may be liable to Withholding Tax at a rate of 0%. Withholding tax is a form of Corporate Tax collected at the source by the payer on behalf of the income recipient. This practice is common in various tax systems and typically applies to cross-border payments of dividends, interest, royalties, and other types of income.
The UAE’s implementation of Corporate Tax reflects its commitment to fostering a favorable business environment and creating attractive investment opportunities. With a robust and internationally aligned tax regime, the UAE stands poised to sustain its reputation as a premier global business hub and financial center.