UAE Federal Tax Authority Clarifies Corporate Tax Deductions for Employee Expenses

The UAE Federal Tax Authority (FTA) has released updated guidance clarifying corporate tax deductions available for employee compensation and benefits, according to The National.

Tax specialist David Daly noted that eligible deductible items include staff transport, meals, accommodation, mobile phone allowances, and parking expenses.

Under FTA Decision No. 17, companies providing home-to-workplace transportation are prohibited from charging employees if they seek to deduct these costs in full. The rules also establish strict boundaries designed to prevent shareholders and directors from claiming personal, non-business deductions.

The guidance is intended to assist businesses in structuring employment packages while remaining compliant under the UAE's 9 percent corporate tax regime.