Dubai Tax Deductions for Foreign Investors (2025)

Key Deductible Expenses under the Corporate Tax Regime:

• General Business Expenses:
  • Ordinary and necessary business expenses are generally deductible. This includes:
  • Salaries and wages
  • Rent and utilities
  • Office supplies
  • Marketing and advertising costs
  • Travel expenses (within reasonable limits)
  • It is vital to maintain meticulous records with proper documentation.
• Depreciation of Assets:
  • Depreciation of tangible and intangible assets is deductible.
  • The UAE corporate tax law will specify depreciation methods and rates.
    It is important to stay informed of the regulations as they are updated.
  • Keep detailed records of asset acquisition and depreciation calculations.
  • It is vital to maintain meticulous records with proper documentation.
• Interest Expenses:
  • Interest expenses on business loans are generally deductible, subject to certain limitations.
  • Thin capitalization rules may apply, limiting the deductibility of interest paid to related parties.
  • It is very important to keep all loan agreements.
• Bad Debts:
  • Bad debts can be deducted if they are proven to be irrecoverable.
  • Adequate documentation is required to support the claim.
• Research and Development (R&D) Expenses:
  • The UAE aims to encourage innovation, and R&D expenses are likely to be deductible.
  • It is important to follow the Federal Tax Authority guidance on this matter.
  • Contributions to Approved Pension Schemes and End-of-Service Benefits:
  • Contributions to approved pension schemes are deductible.
  • End-of-service benefits paid to employees in accordance with UAE labor law are also deductible.
• Donations to Approved Charitable Organizations:
  • Donations to approved charitable organizations within the UAE may be deductible.

Important Considerations for Foreign Investors:

• Documentation:
  • Maintain accurate and complete records of all expenses.
  • Proper documentation is essential to support your deductions.
• Compliance with Federal Tax Authority (FTA) Regulations:
  • Stay updated on the latest regulations and guidelines issued by the FTA.
• Transfer Pricing:
  • If you have related-party transactions, be aware of transfer pricing rules and ensure compliance.
• Economic Substance Regulations:
  • Ensure your business activities align with economic substance requirements.
• Professional Advice:
  • Seek professional tax advice from experts in Dubai to ensure compliance and maximize your deductions.

Key Takeaway: