Can I Claim Office Rent / Flexi-Desk Fees as a Business Expense in United Arab Emirates?
Yes, office rent, flexi-desk fees and co-working memberships used for the business are fully deductible against UAE Corporate Tax. Free Zone flexi-desk packages bundled with the trade license are typically deductible as part of the licensing fee.
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What Federal Tax Authority (FTA) says
FTA accepts office costs (rent, fit-out amortisation, service charges, DEWA utilities) wholly and exclusively for the business as deductible expenses under the Corporate Tax law's general deduction rules. Article 28 of the Corporate Tax law is the general test: expenditure must be incurred wholly and exclusively for the business and must not be capital in nature. Rent is a revenue expense deducted in the period it relates to. Fit-out and leasehold improvements are capital and are deducted through depreciation or amortisation. A prepaid annual rent should be spread over the months it covers.
When you can claim
- Free Zone flexi-desk and shared office packages
- Mainland office rental (Ejari registered)
- Co-working memberships with a clear business purpose
- Service charges and DEWA bills for business premises
- Parking, cleaning and maintenance charges for the business premises
When you cannot claim
- Personal residence costs (no UAE home-office concept like UK/US)
- Ejari for residential lease used as office without licensing approval
- Expenses unrelated to the licensed activity
- Rent paid to a connected person above the market rate, where the excess is not deductible
- Deposits that will be refunded, which are an asset and not an expense
Good to know
Pro tip: Keep the signed lease, the Ejari or free zone registration and the tax invoice for each payment together. A flexi-desk contract should state the licensed address and the services it includes, because the FTA may ask how the space supports the licensed activity.
Important: VAT at 5 percent charged on office rent and service charges is recoverable as input tax if the business is VAT registered and holds a valid tax invoice. Corporate Tax records must be kept for seven years after the end of the tax period they relate to.
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