UAE Corporate Tax for restaurants

This guide summarises the general rules. It is not tax advice; check your position with a registered tax agent or the Federal Tax Authority (FTA) at tax.gov.ae.

The basics

Corporate Tax applies to financial years starting on or after 1 June 2023. Companies running restaurants are within scope, and so are individuals running a restaurant as a business once their turnover passes the threshold set for natural persons. The tax is charged on taxable income for each tax period, normally your financial year:

Example: a restaurant with taxable income of AED 500,000 pays 9% on the AED 125,000 above the threshold — AED 11,250.

Small Business Relief

A resident business with revenue of AED 3 million or less in the tax period, and in each previous tax period, can elect Small Business Relief for tax periods ending on or before 31 December 2026. If elected, the business is treated as having no taxable income for that period. The trade-off is that losses from those periods cannot be carried forward for later use, so it is worth modelling both options before electing.

From accounting profit to taxable income

Taxable income starts from the net profit in your financial statements, then adjusts for items the law treats differently. Adjustments that commonly matter for restaurants include:

• Expenses that are only partly deductible, such as client entertainment.
• Expenses that are not deductible at all, such as fines and penalties.
• Transactions with related parties, which must be on arm’s-length terms.
• Net interest expense, which is limited where it is large relative to earnings.

This is why reliable sales, purchase and cost records matter: every adjustment is easier to support when the underlying numbers came from one consistent system.

Tax losses

Losses can generally be carried forward and set against future taxable income, but only up to 75% of taxable income in any later period. A restaurant that had a difficult opening year can use those losses, but will usually still pay some tax in its first profitable year.

Registration, filing and records

• Businesses within scope must register for Corporate Tax with the FTA, including those that expect to claim relief.
• The return is filed within nine months of the end of the tax period, and any tax is paid by the same date.
• Records supporting the return are generally required to be kept for seven years.

What to prepare as a restaurant

1. Financial statements for the period, reviewed by your accountant.
2. A list of adjustments: entertainment, fines, related-party transactions, interest.
3. Your loss history from previous periods.
4. Revenue for the period and prior periods, if you are considering Small Business Relief.
5. Supporting documents filed against the period they relate to.

Dinivoo prepares Corporate Tax working papers inside the same system that runs your service: enter reviewed accounts or import a trial balance, record adjustments, losses (with the 75% cap), interest and related-party transactions, and elect Small Business Relief where it applies. It calculates the position and keeps the workings with the period; filing stays with you or your adviser. See Dinivoo’s UAE VAT and Corporate Tax tools, or read the VAT guide for restaurants.