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UAE Corporate Tax Fundamentals/Entertainment & Recreation Expenses
5 min

50% Non-Deductibility Rule

50% non-deductibility of entertainment, amusement, and recreation under Article 29.

Entertainment & Recreation Expenses (Article 29)

The Rule

Entertainment, amusement, and recreation expenses are 50% non-deductible. This means only 50% of the cost can be deducted for Corporate Tax purposes.

What Qualifies as Entertainment?

  • Client dinners and business lunches
  • Corporate hospitality events
  • Entertainment at conferences
  • Recreational activities for staff
  • Amusement park tickets for clients

What Does NOT Qualify?

  • Staff training (fully deductible)
  • Meals during official travel (fully deductible if reasonable)
  • Promotional samples (fully deductible)

Calculation

Entertainment expense: AED 100,000
Deductible portion:        50,000 (50%)
Non-deductible:            50,000 (added back)

Documentation

Maintain records showing the business purpose of each entertainment expense.

Key takeaways

  • 50% of entertainment expenses are non-deductible
  • Client dinners and corporate hospitality are included
  • Staff training is fully deductible
Knowledge check

1. What percentage of entertainment and recreation expenses is non-deductible?

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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.