Selling Your Accounting Firm in the UAE: The Complete 2026 Guide
If you own an accounting firm in the UAE, you probably have a good idea…
Taxable income refers to the income that is applicable to be taxed and is part of the business’ operations. It is often reflected in financial records within the accounting year, adjusted for exemptions, reliefs, deductions and losses covered under Federal Decree Law No. 47.
Financial statements must follow accounting standards accepted in the UAE. Ministerial rules dictate using cash or accrual basis system of accounting.
Samples of income applicable include:
| Type of Income | Description | Sample transactions |
|---|---|---|
| Operating Income (most common) | Core business earnings and generally taxable | 1. Sales of goods by a trading company
2. Service fees earned by consultants, agencies, or professionals within the business 3. Subscription or licensing revenue (e.g. SaaS, memberships) 4. Project-based income or retainers 5. Commission income from agency or brokerage activities |
| Income from business assets | Note that this is different from income from personal investments or savings | 1. Rental income from business-owned property
2. Income from leasing equipment or machinery 3. Royalties from intellectual property owned by the business 4. Income from exploitation of trademarks, software, or patents |
| Financing and investment-related business income | Where these arise in the course of business, they are generally taxable.
Note: Some dividends and capital gains may be exempt if participation exemption conditions are met or if they are received from UAE resident juridical persons, but otherwise they form part. |
1. Interest income earned by a company (e.g. treasury or financing activity)
2. Foreign exchange gains related to business transactions 3. Gains from disposal of business assets 4. Dividends or capital gains that do not qualify for exemption |
| Other business related income | Some of these can be overlooked, but these are still important to be included | 1. Management fees charged to related entities (under transfer pricing documentation)
2. Cost recharges and mark-upsInsurance recoveries related to business assets 3. Grants or incentives linked to business operations(unless specifically exempt) |
| Qualifying Free Zone Persons (QFZP) | Overall rule: qualifying income is at 0%; non qualifying income is taxed at 9%
De Minimis Threshold Under the de minimis rule, a QFZP can remain eligible for the 0% rate if its non-qualifying revenue does not exceed the lower of 5% of total Revenue or AED 5,000,000 for the relevant Tax Period (subject to the detailed rules). |
Taxable at 0% (if QFZP conditions are met): 1. Income from qualifying activities with other FZ entities 2. Income from approved qualifying activities 3. Qualifying intellectual property income Taxable at 9%: 2. Income from excluded activities 3. Income breaching the de minimis threshold |
Remember that your accounting profit is only the starting point for calculating UAE Corporate Tax.
Taxable income is determined after making specific adjustments, including removing exempt income, adding back non-deductible expenses, and applying eligible deductions, tax losses, and other reliefs.
The final figure is what determines your Corporate Tax liability. Understanding these adjustments can help you calculate your taxable income accurately and avoid overpaying tax.
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