What income is taxable under Corporate Tax?
WHAT INCOME IS TAXABLE UNDER CORPORATE TAX?
What income is taxable under Corporate Tax in the UAE? Learn what counts as taxable income, what is exempt, and real examples. TAXESMAN explains.
What Income Is Taxable Under Corporate Tax?
What income is taxable under Corporate Tax?
In the UAE, Corporate Tax is charged on a business’s Taxable Income for a Tax Period, which is broadly your accounting profit with specific tax adjustments.
This matters because many UAE business owners confuse revenue with taxable income, or assume that foreign income, dividends, or free zone income is always tax-free. It is not always that simple.
In this guide, you will learn what income is taxable under Corporate Tax, what income may be exempt, and practical examples for Dubai, Abu Dhabi, Sharjah, and free zones.
If you want a clear answer for your business, contact TAXESMAN today.
What Income Is Taxable Under Corporate Tax in the UAE, in Simple Terms?
Corporate Tax in the UAE applies to Taxable Income earned by a Taxable Person in a Tax Period. 
Taxable Income is generally based on:
- Accounting Income (profit) from your financial statements
- Plus or minus adjustments required by the Corporate Tax Law
So when you ask, “What income is taxable under Corporate Tax?”, the practical answer is usually: the business profit after the UAE tax adjustments are applied.
Want TAXESMAN to calculate your Taxable Income correctly and safely? Contact TAXESMAN today.
What Income Is Taxable Under Corporate Tax for UAE Resident Companies?
If your company is a Resident Person, Corporate Tax can apply to worldwide income, meaning:
- Income earned in the UAE, and
- Income earned outside the UAE (foreign source income)
This is important for UAE companies that invoice clients in Europe, the UK, India, or the US.
Even if foreign income is taxable, the UAE rules can allow a foreign tax credit in certain cases to reduce double taxation.
If you earn income abroad through a UAE company, TAXESMAN can help you map what is taxable and how foreign tax credits may apply.
What Income Is Taxable Under Corporate Tax for Non-Resident Businesses?
Non-resident businesses are typically subject to Corporate Tax in the UAE when they have a UAE taxable presence, commonly a Permanent Establishment such as a branch or office.
In those cases, taxable income is generally the profit attributable to the UAE activity.
If you are a foreign company operating in the UAE, TAXESMAN can help confirm whether you have a Permanent Establishment and what income becomes taxable.
What Income Is Taxable Under Corporate Tax, and What Income Is Exempt?
This is where many businesses get surprised.
Some types of income can be treated as exempt under UAE Corporate Tax rules, subject to conditions.
UNDERLINED: Dividends and participation exemption
The UAE provides exemptions for certain dividend income and gains from qualifying shareholdings (participation exemption).
In simple terms, this is designed to reduce double taxation for holding-company style structures.
If your UAE business receives dividends or sells shares in another company, TAXESMAN can review whether the exemption applies to you.
UNDERLINED: Other exemptions can exist depending on your status
There are additional categories and specific rules across the Corporate Tax framework, so it is always safer to confirm rather than assume.
If you want a clear “taxable vs exempt” income map, contact TAXESMAN today.
What Income Is Taxable Under Corporate Tax for Free Zone Companies?
Free zone companies are within the UAE Corporate Tax regime, but some may benefit from a 0% rate on qualifying income if they meet conditions (Qualifying Free Zone Person concept).
This means a free zone company can have:
- Income treated at 0% (qualifying), and
- Income treated at 9% (non-qualifying), depending on the facts
If you are a free zone business, TAXESMAN can classify your income streams correctly and reduce compliance risk.
Practical Examples: What Income Is Taxable Under Corporate Tax?
Dubai example: French entrepreneur running a services company
A French founder runs a Dubai mainland consultancy.
- Client invoices are revenue
- Business profit after expenses is the base for Taxable Income, with tax adjustments
If you want your Taxable Income calculated properly, contact TAXESMAN today.
Abu Dhabi example: UAE company earning foreign income
A UAE company in Abu Dhabi earns income from overseas clients.
- Foreign source income can be included in the UAE Corporate Tax base for a Resident Person
Sharjah example: Trading business
A Sharjah trading business earns profit on sales.
- Profit is the taxable income base, not the total sales value
Common Mistakes When Thinking About Taxable Income Under Corporate Tax
If you are searching “What income is taxable under Corporate Tax?”, watch out for these common misunderstandings:
- Treating revenue as taxable income (it is taxable profit, with adjustments)
- Assuming foreign income is always outside UAE Corporate Tax (resident companies can be taxed on worldwide income)
- Assuming dividends and investment gains are always taxable (some can be exempt under participation rules)
- Assuming free zone status automatically means 0% for all income (qualifying vs non-qualifying matters)
If any of these sound like your situation, contact TAXESMAN today.
What Income Is Taxable Under Corporate Tax?
To recap, what income is taxable under Corporate Tax in the UAE? Corporate Tax applies to Taxable Income in a Tax Period, generally based on accounting profit with UAE tax adjustments, and resident companies can be taxed on UAE and foreign income, while some income categories may be exempt (subject to conditions).
Do not guess what is taxable. Let TAXESMAN review your income streams, confirm exemptions, and prepare a clean Corporate Tax filing pack.
FAQs: What Income Is Taxable Under Corporate Tax?
What income is taxable under Corporate Tax in the UAE?
Generally, business profits (Taxable Income) for the Tax Period, based on accounting profit with specific tax adjustments.
Is revenue the same as taxable income?
No. Revenue is sales. Taxable income is usually profit after costs, with Corporate Tax adjustments.
Is foreign income taxable under UAE Corporate Tax?
For a UAE resident company, foreign source income can be included in the Corporate Tax base, with potential foreign tax credit relief in some cases.
Are dividends taxable under UAE Corporate Tax?
Certain dividends and gains from qualifying shareholdings may be exempt, subject to conditions.
Can a free zone company have taxable income at 9%?
Yes, depending on whether income is qualifying or non-qualifying under the free zone framework.