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!

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