Taxable Income

Taxable income is the portion of an individual’s or a company’s income that is subject to taxation after deductions, exemptions, and allowances are applied. It forms the basis upon which tax liability is calculated. For businesses, taxable income typically includes gross revenue minus operating expenses, cost of goods sold (COGS), depreciation, interest, and other allowable deductions under tax regulations.

Formula:

Taxable Income = Gross Income – Allowable Deductions – Exemptions

In jurisdictions like the UAE, taxable income primarily applies to corporate tax for certain entities, with recent introductions of corporate tax rates for qualifying businesses.