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A key concern under UAE corporate tax is whether input VAT, though recoverable under VAT law but not claimed, qualifies as a deductible expense. Businesses are now advised to separately track unrecovered input VAT to avoid compliance risks.
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The deductibility of compensatory payments, such as liquidated damages not “awarded” by courts, raises uncertainty. A literal reading of tax laws could disqualify mutually agreed compensation from being considered deductible business expenses.
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Car rental companies face challenges deducting traffic fines paid on behalf of customers. These fines, not considered awarded or compensatory, may be non-deductible, complicating tax treatment despite recovery from lessees as income.
Source: Gulf News
