Carry-Forward & Exemptions
Excess Interest Carry-Forward
Interest that cannot be deducted due to the cap is carried forward indefinitely. In future periods, it is subject to the same limitation (AED 10M or 30% of EBITDA).
Order of Utilisation
- First, utilise current year interest expense
- Then, utilise brought-forward excess interest
Exemptions from the Cap
1. Banks and Financial Institutions
Banks are generally exempt because interest is their core business. They are subject to separate rules.
2. Cash Pooling Arrangements
Interest from qualifying cash pooling arrangements within a tax group may be exempt.
3. Standalone Entities
Entities with net interest expense below the de minimis threshold (AED 10M) are not affected by the cap.
Election for Alternative Calculation
The FTA may allow an alternative method in exceptional cases, subject to prior approval.