Interest is deductible, but net interest expense above a limit is carried forward rather than deducted in the year.
Key facts from the law
Net Interest Expenditure is deductible up to 30% of adjusted EBITDA; the excess is carried forward for up to 10 Tax PeriodsCorporate Tax Law, Art. 30
Net Interest Expenditure up to AED 12,000,000 is deductible in any case (de minimis)Ministerial Decision 126/2023, Art. 8
Net Interest Expenditure is deductible up to the higher of AED 12 million and 30% of EBITDA; the rule does not apply where current plus carried-forward Net Interest Expenditure does not exceed AED 12 millionFTA Corporate Tax Returns Guide, p. 81
Each point is checked against the text of the law or FTA guide held by TI.
Yes, interest expense is generally deductible for Corporate Tax, but if your net interest costs are large there's a cap - broadly 30% of adjusted EBITDA - unless your net interest is under AED 12 million.
Interest expenditure is deductible in the tax period incurred, subject to Article 28 and the limitation rules in Articles 30 and 31 of the Corporate Tax Law.
The General Interest Deduction Limitation Rule does not apply where net interest expenditure for the tax period does not exceed AED 12,000,000, and above that threshold the deductible amount is the higher of AED 12,000,000 or the Article 30 percentage limit.
Interest incurred on acquiring and holding a Participating Interest is deductible subject to the general interest rules in Chapter Nine, even though other acquisition/disposal costs of that interest are not deductible.
Interest expenses used to reduce your taxable profit are capped at 30% of your adjusted earnings (EBITDA), but you can always deduct up to AED 12,000,000 of net interest even if that's more than 30%. Any disallowed amount can be carried forward and used in the next 10 tax periods.
Net Interest Expenditure is deductible up to 30% of EBITDA (Taxable Income adjusted for interest, depreciation/amortisation, and certain pre-9 Dec 2022 financial asset interest) under Article 30(1)-(2) of the Corporate Tax Law and Article 9 of Ministerial Decision No. 126 of 2023.
Where Net Interest Expenditure does not exceed AED 12,000,000, the 30% cap does not apply at all, and above that threshold the deductible amount is the higher of AED 12,000,000 or the 30% EBITDA figure, per Article 8 of Ministerial Decision No. 126 of 2023.
Disallowed Net Interest Expenditure may be carried forward and deducted in the subsequent 10 Tax Periods, in the order incurred, under Article 30(4) of the Corporate Tax Law.
Guidance only, not tax advice. Answers were drafted by TI from the FTA’s published law and last updated on 25 September 2026; rely on the official text and a registered tax agent before you file.