FAQ – Article 28 Deductible expenditure
Source: https://mof.gov.ae/corporate-tax-faq/
- What expenditure will be deductible for the purposes of calculating taxable income?
In principle, all legitimate business expenses incurred to derive taxable income will be deductible, although the timing of the deduction may vary for different types of expenses and the accounting method applied. For capital assets, expenditure would generally be recognised by way of depreciation or amortisation deductions over the economic life of the asset or benefit.
Expenditure that has a dual purpose, such as expenses incurred for both personal and business purposes, will need to be apportioned with the relevant portion of the expenditure treated as incurred wholly and exclusively for the purpose of the taxable person’s business.
- What expenditure will be non-deductible for the purposes of calculating taxable income?
Article 33 of the UAE Corporate Tax Law lists certain specific expenses for which no deduction will be allowed, such as bribes, fines and penalties, and no deduction is available for expenditure incurred in deriving income that is exempt from CT or losses that are not connected with or arising out of a taxpayer’s business. Additionally, certain restrictions may apply to the deduction of interest expenditure (see question 92, Will my interest expenditure be fully deductible?).
