Are fines and penalties deductible for tax in UAE?

No, companies can't deduct fines or penalties from their taxable income under UAE CT law.

Why do I need to keep records for deductible expenses?

You need to keep all records to prove your expenses are real business costs if the FTA checks your business.

Service Fees Deductible Under UAE CT Law

Will Service Fees Paid to Local and Federal Governments be Deductible

Many business owners in the UAE ask if service fees paid to the government can be deducted under corporate tax law. With the new CT regime, companies must know what expenses lower taxable income. The FTA gives rules about calculating taxable income and following the CT law. Calculating taxable income needs a strong knowledge of CT rules.

What Is Deductible Expenditure?

The CT law lets companies reduce some expenses from taxable income. This deduction helps lower tax bills. Companies can only deduct business expenses that are necessary for daily operations. These must be real business costs. If a company spends money for something not related to the business or for capital items, it can’t deduct those costs.

Deduct only expenses used in the business.
Don’t deduct capital expenditures.
Keep all expenses legal and for business only.

Are Service Fees Paid to the Government Deductible?

Companies often pay the government for licenses, renewals, visa fees, or registration. These service fees can be deducted if the expense is needed for business operations. The fee must not be a capital expense. The fee should be only for business work.

License and renewal fees are deductible.
Visa or registration fees for business are deductible.
Capital expenses are not deductible.

What Expenses Are Not Deductible Under UAE Corporate Tax?

Some expenses can’t be deducted under UAE CT law. These include:

Fines or penalties paid to the government.
Bribes or illegal payments.
Expenses not used for business work.

If a business pays these, it can’t reduce tax by claiming them.

What Records Should Be Kept for Deductible Expenses?

Businesses must keep clear records to claim deductions. Always save:

Receipts and invoices for each business expense.
Bank statements that show payment for business costs.
Contracts, licenses, or agreement documents.
Other important paperwork that proves the expense was for business.

These records will help if the FTA checks your deductions.

How Mubarak Al Ketbi Chartered Accountants Can Help

Mubarak Al Ketbi Chartered Accountants helps businesses find and record every deductible expense. Our team guides you through CT law. We help you lower your tax bill and keep all records safe.
When you choose us, you can rest easy—because we always go the extra mile for your business!

For more information:

Visit our office: Saraya Avenue Building – Office M-06, Block/A, Al Garhoud, Dubai – UAE
Contact/WhatsApp: +971 50 276 2132

FAQs on What business expenses are deductible under UAE corporate tax?

What’s the first step to get a VARA license in UAE?

The first step is sending a disclosure form to DET or a Freezone Authority, with business plans and documents, and then paying the first half of the fee.

What papers must I have for the VARA license?

You must prepare business certificates, owner lists, proof of capital, management plans, business forecasts, and insurance documents.

Can I start my business after initial approval?

No, you can only set up the company and hire staff. You can’t run any virtual asset activities until you get the VASP license.

How long does the VARA license process take?

The process time depends on how fast you send documents and answer VARA questions, but it usually takes several weeks to months.

How can Mubarak Al Ketbi (MAK) Auditing help my company?

MAK Auditing helps you gather documents, fill out forms, pay fees, and follow VARA rules so your company can run safely and legally.