Gratuity and Corporate Tax deduction
Can we deduct the gratuity provision in our Corporate Tax return?
The situation
Employee costs incurred for the business are deductible. Provisions follow accounting rules, but the deduction timing should match the accrual basis applied.
The law
- Art 28, Federal Decree-Law 47 of 2022: Deductible expenditure incurred for the business
What it means for you
Accrue gratuity monthly in the books. Example: a company with AED 60,000 gratuity accrual for the year includes it in staff costs. If owners are also employees, connected person rules apply to their pay and gratuity.
What to do
- Accrue gratuity monthly.
- Keep the calculation by employee.
- Include it in staff costs.
- Check connected person rules for owners.
We can do this for youPayroll compliance: WPS salary runs, end of service gratuity, final settlement and payroll records: AED 95