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UAE Corporate Tax Fundamentals/Non-Deductible Expenses
5 min

Fines, Penalties & Bribes

Treatment of fines, penalties, and illegal payments.

Fines, Penalties & Bribes

Fines and Penalties

All fines and penalties imposed by government entities (including traffic fines, regulatory fines, and tax penalties) are non-deductible.

Illegal Payments

Bribes, kickbacks, and any payments that are illegal under UAE law are non-deductible.

Rationale

The non-deductibility of fines and illegal payments reflects public policy — the tax system should not subsidise unlawful behaviour.

Treatment in Tax Computation

Accounting profit:     AED 1,000,000
Add: Traffic fines:         5,000
Add: Regulatory fine:       10,000
Taxable income:       AED 1,015,000

Key takeaways

  • All fines and penalties are non-deductible
  • Bribes and illegal payments are non-deductible
  • These are added back to accounting profit

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This lesson is general educational content, not individualized tax or legal advice. Always consult a qualified professional for your specific situation.