Dividends & Corporate Tax
Dividends
Dividends paid to shareholders are non-deductible. They are a distribution of profit, not a business expense.
Corporate Tax Itself
Corporate Tax expense is non-deductible. You cannot reduce your taxable income by the amount of tax you owe.
Other Non-Deductible Items
- Input VAT that is non-recoverable
- Donations to non-qualifying entities
- Expenses related to exempt income
Example
Accounting profit: AED 1,000,000
Less: Dividends received: (100,000) [exempt income]
Add: Corporate tax expense: 50,000 [non-deductible]
Add: Non-recoverable VAT: 5,000 [non-deductible]
Taxable income: AED 955,000