Are Gratuity Provisions Tax Deductible under UAE Corporate Tax Law?

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• Yes, gratuity provisions are generally deductible under UAE corporate tax.
• You must show a legally required, reasonable estimate, recorded in the financial statements, aligned with IFRS, and not excessive or capital in nature.
• If the provision is later released, that amount becomes taxable income.

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✅ Recommended Actions

• Ensure your accounting policy, based on IAS 19 or equivalent, properly calculates and recognizes gratuity liability.
• Maintain documentation to show that the provision is a business expense, incurred “wholly and exclusively” for the employee benefits.
• Treat any reversal of that provision as taxable in that period.

1view expressed in this post is personal.