Can I Claim Employee Salaries as a Business Expense in United Arab Emirates?
Yes — employee salaries paid to UAE-licensed staff are fully deductible against Corporate Tax. Note: there is no UAE personal income tax. WPS (Wage Protection System) compliance is mandatory for all UAE employers.
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What Federal Tax Authority (FTA) says
Salaries, wages, end-of-service benefits, housing and transport allowances are deductible business expenses provided they are commercially reasonable and paid through WPS.
When you can claim
- Basic salary, housing and transport allowances paid via WPS
- End-of-service gratuity accrual (paid on termination)
- Health insurance premiums (mandatory in Dubai/Abu Dhabi)
- Visa and labor card costs for employees
When you cannot claim
- Salaries to non-licensed individuals (e.g., paying someone without a residence visa)
- Excessive owner-shareholder salary deemed disguised profit distribution
- Personal expenses categorised as wages
Good to know
Pro tip: Owner-managers should pay themselves through formal payroll (WPS) rather than ad-hoc bank transfers — it strengthens the deductibility case and supports residence visa renewals.
Related expenses
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