Can I Claim Software Subscriptions as a Business Expense in United Arab Emirates?
Yes, SaaS subscriptions used in the business are fully deductible against Corporate Tax. VAT recoverable on UAE-supplied software at 5%; reverse charge applies to non-UAE supplied digital services. Annual plans paid in advance are spread across the months they cover when the accounts are prepared.
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What Federal Tax Authority (FTA) says
Software subscriptions are ordinary trading expenses. Reverse charge VAT applies to digital services from non-UAE suppliers: record both output and input VAT (net zero) on the VAT return. Where a supplier outside the UAE provides the software, the UAE business accounts for 5 percent VAT under the reverse charge in the same return and recovers it as input tax if the business makes taxable supplies. Software bought outright for a long period is a capital asset, so it is depreciated and not expensed at once.
When you can claim
- Monthly/annual SaaS (Slack, Notion, Adobe, Xero)
- Cloud hosting (AWS, Azure, GCP)
- Domain names and website hosting
- Stock photography, design assets
- Cybersecurity, backup and password management tools
- Accounting, payroll and e-invoicing tools used by the finance team
- Collaboration and video meeting tools
When you cannot claim
- Personal subscriptions (Netflix, personal use Spotify)
- Mixed-use subscriptions without apportionment
- Software bought outright above capitalisation threshold
- Software licences held in a shareholder's personal name and used outside the business
- Subscriptions for a related company that should be recharged to that company
Good to know
Pro tip: Keep a register of subscriptions with the supplier, country, cost and users. The register shows which invoices come from a UAE supplier with VAT and which need the reverse charge.
Important: Domain names and web hosting follow the same rule. A free zone company that is not VAT registered cannot recover input VAT, so the VAT becomes part of the cost.
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