Can I Claim Client Entertainment as a Business Expense in United Arab Emirates?
Partially, UAE Corporate Tax law restricts the deduction for entertainment expenditure to 50% of the amount incurred. This applies to meals, accommodation, transportation and similar entertainment of clients, customers, suppliers and other business associates.
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What Federal Tax Authority (FTA) says
Article 32 of Federal Decree-Law No. 47 of 2022 (the entertainment expenditure rule, which sits after the general deduction test in Article 28) limits entertainment expenditure deductions to 50% of the amount incurred. Must be in the context of the business: purely personal entertainment is fully disallowed. The rule covers receiving and entertaining customers, shareholders, suppliers and other business partners, including meals, accommodation, transport and admission fees. A restaurant meal is always entertainment and cannot be treated as incidental. Taking clients to a sporting event with tickets, food and drink in a corporate box is also entertainment, so only half is deductible. Food and refreshments in the office, and a trade show stand that promotes goods or services, are ordinary business expenditure and are fully deductible.
When you can claim
- 50% of client meals at restaurants
- 50% of client accommodation when hosting visitors
- 50% of client transportation arranged for meetings
- Staff parties, away-days and rewards for meeting targets, which the FTA treats as employee costs and not entertainment, so they can be fully deducted
When you cannot claim
- 100% of any entertainment without business association
- Lavish expenditure (FTA challenge risk)
- Personal entertainment dressed up as business
- Input VAT on entertainment, which is blocked even though half the cost is deductible for Corporate Tax
Good to know
Pro tip: Code client meals and staff events to different accounts. The FTA treats a private event such as a family wedding for a staff member as non-deductible even when staff attend.
Important: Entertainment is one of the few categories with an explicit deduction limit in UAE CT law. Track entertainment in a separate ledger account so the 50% adjustment is straightforward at year-end.
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