Are municipal and emirate-level taxes deductible?

• • tax on income imposed outside the UAE (however, tax relief may be available as a Foreign Tax Credit),54 and contributions made by employers to a private pension fund in respect of its employees which are not paid in the Tax Period, or are in excess of 15% of the employee’s total remuneration in the relevant Tax Period (see Section 5, i.e. Case Study 1 for details).55 Local taxes that are not in the nature of Corporate Tax, such as municipal and property taxes, will be deductible. However, a tax under an Emirate Law, such as that paid by branches of foreign banks in the UAE is not allowed as a deduction from Taxable Income under the Corporate Tax Law. The availability or not, of a credit against a tax under Emirate Law in respect of Corporate Tax, such as under Dubai Law No. 1 of 2024 on Taxation of Foreign Banks Operating in the Emirate of Dubai, does not alter this. 4.5.10. Entertainment expenditure Entertainment is considered as hospitality of any kind and entertainment expenditure is the expense of providing entertainment. It is common to incur such costs for the entertainment, amusement or recreation of customers, shareholders, suppliers, or other business partners, such as hospitality at restaurants, cultural events, sporting events, hotel stays and similar trips. Entertainment expenditure usually serves to build relationships and promote the Business in a more informal or social setting. Entertainment expenditure includes expenditure in connection with meals (food and beverages), accommodation, transportation, admission fees, as well as facilities and equipment used in connection with such entertainment.56 However, this type of expenditure often contains a private element that is provided for the enjoyment or hospitality of the recipients/guests that would prevent the expenditure from being wholly and exclusively incurred for Business purposes. Thus, a 50% deduction for entertainment expenditure is allowed for Corporate Tax purposes.57 For Corporate Tax purposes, the accounting classification of a particular expense is not relevant when considering whether such an expense is entertainment expenditure. 54 Articles 33(8) and 47 of the Corporate Tax Law. 55 Article 5(2) of Ministerial Decision No. 115 of 2023. 56 Article 32(2) of the Corporate Tax Law. 57 Article 32(1) of the Corporate Tax Law. Corporate Tax Guide | Determination of Taxable Income | CTGDTI1 34