UAE: Tax guide on interest deduction limitation rules

A summary of key highlights of the guide and important points for taxpayers to note.

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May 27, 2025

The Federal Tax Authority (FTA) released a comprehensive guide on interest deduction limitation rules that provides important clarifications on:

  • The various expenses that need to be considered as part of interest expenditure while calculating the taxable income.
  • The order in which the various corporate tax provisions should be applied for computing the deductible amount of interest.

Highlights of the guide include:

  • Meaning of interest
  • Deductible interest expenditure
  • General principles of deductibility of expenditure
  • Arm’s length principle
  • Specific interest deduction limitation rule (SIDLR)
  • General interest deduction limitation rule (GIDLR)
  • Exceptions to GIDLR

Read a May 2025 report prepared by the KPMG member firm in the UAE

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