Deductible Expense Under The UAE Federal Corporate Tax Law

ACL Tax Consultants is undoubtedly an exceptional choice for tax consultancy services in Dubai. With our extensive expertise and in-depth knowledge of the UAE’s tax laws and regulations, As reputed corporate tax consultants in Dubai, ACL Tax Consultants consistently delivers exceptional results to our clients.

A Taxable Person has access to specific tax exemptions from their Taxable Income that were paid by the Person during the applicable Tax Period under the recently published UAE Corporate Tax Law.

How about a tax deduction, though? According to UAE Corporate Tax Law, it indicates a number of expenses that can be deducted from a taxpayer’s total taxable income when determining their tax obligation. Tax deductions lessen a taxpaying person’s taxable income, which in turn lowers their tax obligation. Tax deductions are legitimate financial incentives offered in accordance with the law and are recoverable by taxpayers.

Article 30 of the UAE corporate tax legislation specifies the general interest deduction limits for company tax deductions. A taxable person may deduct up to 30% of their earnings before to EBITDA in order to qualify for the general interest deduction. The amount of this deduction will be treated as net interest expense.

The net interest expenditure is computed by deducting the interest expense for the tax period from the taxable interest income collected by the taxable person. The amount of net interest expense that has been carried over from a prior period should also be included in the taxable interest income.

tax group in corporate tax

Investment in entertainment

Up to 50% of the cost of expenses related to entertaining clients, shareholders, suppliers, and other business partners, including meals, travel, accommodation, cost of admission, spaces and furnishings used for entertainment, and other costs specified by a Cabinet decision, may be written off. 

Expenses That Aren’t Deductible

Related party payments given to a Free Zone entity are not deductible under CT. However, payments paid to a Free Zone entity’s mainland branch may be tax deductible. Administrative fines, recovered VAT, and donations will not be eligible for a deduction. There will be a 50% tax deduction for entertainment costs.

By engaging ACL Tax Consultants for tax consultancy services in Dubai, businesses in the UAE can rest assured that they have one of the well trusted corporate tax consultants in Dubai by their side, empowering them to navigate the complex tax landscape and achieve their financial objectives.

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