Client entertainment and UAE corporate tax: calculator
For UAE corporate tax, only 50% of expenses on entertaining customers, shareholders, suppliers and other business partners is deductible. The other 50% is added back to taxable income, which costs 9% of the add-back (4.5% of the total spend) once profits are above AED 375,000.
Reviewed by Countify's ACCA/FCCA chartered certified accountants · Updated
- Non-deductible (50%)
- AED 40,000.00
- Extra corporate tax
- AED 3,600.00
The 50% limit covers meals, hospitality, events and gifts for customers, shareholders and suppliers. Staff entertainment is normally fully deductible. Input VAT on client entertainment is blocked in full.
Results are estimates for general information, not tailored advice.
Extra tax on client entertainment
Taxable income already above AED 375,000.
| Entertainment spend | Non-deductible (50%) | Extra corporate tax |
|---|---|---|
| AED 20,000 | AED 10,000.00 | AED 900.00 |
| AED 80,000 | AED 40,000.00 | AED 3,600.00 |
| AED 200,000 | AED 100,000.00 | AED 9,000.00 |
Effectively 4.5% of the spend when profits are above AED 375,000.
What counts as entertainment
Entertainment includes meals, drinks, hospitality, accommodation, transport and admission to events provided to people outside the business, plus gifts. Costs of entertaining employees are generally fully deductible, though they may be a taxable benefit in some cases.
- Client dinners and business lunches: 50% deductible
- Event tickets for customers: 50% deductible
- Staff party: normally 100% deductible
VAT is stricter
Input VAT on client entertainment is blocked in full, so you cannot reclaim the 5% VAT on a client dinner. Keep entertainment in its own ledger account so both adjustments are easy at year end.
Legal basis
We review this calculator whenever the FTA or Ministry of Finance issues a new decision or clarification.
Frequently asked questions
Is client entertainment deductible in the UAE?
50% is deductible for corporate tax. Input VAT on it is not recoverable at all.
Are staff meals entertainment?
Generally no. Staff entertainment and meals are usually fully deductible.
Corporate tax registration and returns
We register you, prepare the tax computation and file your corporate tax return, with Small Business Relief, QFZP and loss elections handled correctly.