Other BriefingsUAE Tax Deductible Business Entertainment Expense Allowances
The new UAE tax code commences on June 1st, with clarity still required in certain areas. One question frequently asked of us is the situation concerning business entertainment expenses.
The new tax regulations allow a 50% deduction on any entertainment, amusement, or recreation expenditure for the purposes of receiving customers, shareholders, suppliers or other business partners. This includes meals, accommodation, transportation. Receipts need to be provided and the entertainment type explained. This is actually a pretty good deal by international tax standards where the provision of allowances against business entertainment is far less and strictly controlled.
But, when it comes to your own staff entertainment – which could include holiday dinners, celebrations, and so on – 100% of this expenditure incurred is fully deductible.
However, this tax relief also opens up more questions for UAE taxpayers. Companies will have to evaluate expenses where employees and customers/vendors are jointly present. And how are expenses incurred by an owner while an employee under the company’s employment visa settled in accounts?
Questions still remain in certain areas: Will individuals conducting business be considered as owners or as an employee? Will exhibition and marketing events be treated as entertainment or as business promotion? The tax code requires clarification on these areas, but the good news is that the business entertainment allowance is generous.
Related Reading
- Clarifying UAE Individual Income Tax Liabilities & Exemptions For Residents and Non-Residents
An Introduction to Doing Business in Dubai 2023
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