UAE: Can you claim all accounting expenses to prepare tax return?

UAE: Can you claim all accounting expenses to prepare tax return?

Relevant provisions of UAE Corporate Tax Law explained

Photo for illustrative purposes only. - KT file

By Mahar Afzal/Compliance Corner Published: Sun 5 Mar 2023, 1:33 PM

Taxable persons are liable to pay tax on their taxable profits. As required by the Corporate Tax Law of the UAE (UAE CT law), taxable persons are responsible for adjusting their accounting profits to arrive at the taxable profits. The adjustments to the accounting profits can be allowable and disallowable expenses, adding and deleting income to calculate the taxable profits. Our previous articles established that Taxable profits equal accounting profit as per financial statements + disallowable expenses - allowable tax expenses + other taxable income - other nontaxable income.

The core objective of disallowing some expenses and allowing others is to ensure the taxable person claims only tax-allowable expenses to arrive at the taxable profits.

Regarding the deductibility of expenses, article 28 of the UAE CT law carries general provisions. Article 28 (1) requires that if the revenue expenses are wholly and exclusively for business purposes, the taxable person can claim all expenses in the same tax period in which these expenses are incurred.

Revenue expenses are incurred for the day-to-day operation of the business, and it does not