Can I Claim Trade License Fees as a Business Expense in United Arab Emirates?
Yes, trade license issuance and annual renewal fees are deductible against Corporate Tax. This includes the Free Zone licensing fees, mainland DED fees, and any chamber of commerce subscriptions. The fee is deducted in the tax period it relates to, so a licence paid in advance for two years is spread across both periods.
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What Federal Tax Authority (FTA) says
Statutory licensing costs incurred to operate the business are ordinary trading expenses deductible against Corporate Tax. Fees that are charged to operate the licensed activity are revenue expenses under the general deduction rule in Article 28 of the Corporate Tax law. Fines and penalties for late renewal are not deductible. The cost should be spread over the licence period if one payment covers more than one tax period.
When you can claim
- Annual Free Zone trade license renewal
- Mainland DED license issuance and renewal
- Chamber of Commerce membership
- Activity addition fees
- Fees for adding, amending or cancelling a licensed activity
- Costs of notarised documents required by the licensing authority
When you cannot claim
- Personal residence visa fees (separate from business operation)
- Fines and penalties for late renewal
- Fees paid for a shareholder's personal visa or Emirates ID, unless the shareholder is an employee of the business
- Any fine paid to the licensing authority or the Department of Economic Development for operating without a licence
Good to know
Pro tip: Diary the renewal date for each licence and the related visa and Ejari renewals. A licence that lapses can freeze the corporate bank account and block visa processing, which costs far more than the fee.
Important: A free zone company that wants to qualify for the 0 percent Qualifying Free Zone Person rate must keep its licence valid for the whole tax period. VAT on a licence fee is recoverable only where the authority charges VAT and issues a tax invoice.
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