Key takeaways
- A UAE company can deduct a business cost for corporate tax even if the owner paid it personally, because the test in Federal Decree-Law No. 47 of 2022 (Article 28) asks whether the expenditure was incurred wholly and exclusively for the company's business, not who handled the payment.
- A personally paid expense only works cleanly if the company records it in its own books and treats the owner as a creditor (a shareholder loan or director's current account) until the company repays them.
- Corporate tax records must be kept for 7 years following the end of the tax period they relate to, so a receipt for a personally paid expense needs to survive that long.
- An expense that mixes business and personal use, such as a phone or a car, is deductible only for the business portion, and an expense that can't be fairly apportioned isn't deductible at all.
- Capital items, such as equipment, are not deducted in one go even when the business bought them; they are written off over time through depreciation.
Can my company claim an expense I paid personally?
Yes, the company can generally claim it, provided the cost was genuinely for the business and is properly recorded. Article 28 of Federal Decree-Law No. 47 of 2022 allows a deduction for expenditure incurred wholly and exclusively for the purposes of the taxable person's business, and it is not capital in nature. Nothing in that test turns on whose card or bank account paid the supplier.
The practical difficulty is evidence. The company has to show the cost belongs to the business, which means an invoice or receipt that identifies what was bought and, ideally, the company's name. The FTA's own FAQ says that in principle all legitimate business expenses incurred to derive taxable income are deductible (FTA Corporate Tax FAQs). The guide on determination of taxable income does not, in the parts we checked, deal with owner-paid expenses by name, so treat the approach below as the reasoned application of the rule, not a published FTA safe harbour.
How should a personally paid business expense be recorded?
Record the cost as an expense in the company's books and credit the amount to a shareholder loan or director's current account, because the company now owes the owner that money. The expense reaches the profit and loss account, which is what feeds the corporate tax computation; the liability sits on the balance sheet until it is settled.
- Keep the original invoice or receipt, and note the business purpose on it.
- Enter the expense in the accounting system on the date it was incurred, with the supplier's name and the amount.
- Post the offsetting entry to the owner's loan account, not to cash.
- Repay the owner by bank transfer from the company account, with the transfer reference matching the claim.
- Reconcile the owner's loan account every month so that old balances don't pile up unexplained.
If you'd rather not track these dates by hand, the free UAE compliance calendar lists your company's tax and compliance deadlines.
Which personally paid expenses are deductible, and which aren't?
Deductibility depends on the nature of the expense, not on the payment method. The table sets out common cases as the rule applies to them (checked 5 November 2026).
| Situation | Corporate tax treatment | What to keep |
|---|---|---|
| Client lunch, software subscription or courier fee paid on your own card, used only for the business | Generally deductible if wholly and exclusively for the business (entertainment has its own limits, covered in a separate guide) | Invoice, business purpose note |
| Phone, internet or car used for both business and private use | Only the business portion; if it can't be fairly apportioned, not deductible | Usage basis, same method each period |
| Laptop or other equipment bought personally for the company | Not deducted in full; capital in nature, so relief comes through depreciation | Invoice, asset register entry |
| Purely personal costs (family travel, personal rent) | Not deductible, because they aren't for the business | Not applicable |
| Costs before the licence existed | May be allowed if booked in the company's accounts and not claimed by anyone else (per PwC's summary of the FTA guide) | Invoices, dates, proof the company took them on |
The apportionment point comes from the FTA FAQ, which says dual-purpose expenses must be split and only the business share counts. The pre-incorporation point comes from a Big Four summary of the FTA guide, so confirm it against the guide itself before relying on it.
7 years: how long a taxable person must keep records following the end of the tax period they relate to. Source: Federal Decree-Law No. 47 of 2022, Article 56, checked 05 November 2026.
Does the 7-year record rule apply to receipts you paid for yourself?
Yes, because the record has to support what the company puts in its return. Article 56 requires taxable persons to keep records that support the information in a return and that let the FTA determine taxable income, for seven years after the end of the tax period. A receipt sitting in an owner's personal email or a photo on a phone is still a company record the moment the company claims the expense, so move it into the accounting system, not just a camera roll.
What about VAT on expenses paid personally?
VAT is a separate test with its own conditions, so a corporate tax deduction doesn't automatically mean the VAT is recoverable. Input VAT recovery depends on the VAT rules, including holding a valid tax invoice, and we haven't verified from an official FTA source how the FTA treats an invoice issued in the owner's name rather than the company's. Check that point with your accountant before claiming VAT on such an invoice.
One recent change is worth knowing about without over-reading it. FTA Decision No. 17 of 2026 on cases and conditions for input tax recovery on employee expenses was issued on 9 September 2026 and published on 28 September 2026 (FTA legislation page). Secondary reports say it applies from 1 October 2026 and covers six categories of benefits an employer provides free of charge, such as staff transport, meals and phones. Those reports don't say it governs reimbursing expenses a person paid out of pocket, so don't assume it does.
What most guides don't tell you
- The paper trail decides the outcome, not the principle. The rule is permissive, but if the only proof of a personally paid expense is a bank statement line, you'll struggle to show the business purpose when asked. A one-line note on each receipt costs nothing at the time and saves a long email chain later.
- An unrepaid owner balance isn't free of consequences. The company's liability to you keeps sitting on its balance sheet. Auditors, banks and buyers read that account, and a large unexplained balance invites questions about what the underlying payments really were.
- Reimbursing more than you spent is a different transaction. Repaying cost is simple; paying a shareholder or director a premium over what they actually paid raises connected-person questions that the plain reimbursement doesn't.
- Mixed-use costs need a consistent method. The FTA FAQ requires a fair split; choose one basis (say, a logged business-kilometre share for a car) and apply it every period, rather than changing it to suit the year.
Which deadlines apply to your company?
Personally paid expenses sit inside your wider corporate tax and VAT routine, and the dates for filing, payment and record retention are what turn good bookkeeping into compliance. The free UAE compliance calendar is a calendar of your company's UAE tax and compliance deadlines, personalised from a few questions, as a PDF and calendar file.
Frequently asked questions
Is director salary deductible for corporate tax in a UAE company? A director's salary can be deductible if it is wholly and exclusively for the company's business and reflects genuine work, but payments to owners get closer scrutiny than ordinary staff pay. Keep the contract, payroll records and evidence of the services performed.
What expenses are deductible for UAE corporate tax? Expenditure incurred wholly and exclusively for the taxable person's business, and not capital in nature, is deductible under Article 28 of Federal Decree-Law No. 47 of 2022. Some items are restricted or excluded, so check the specific category before claiming.
Are entertainment expenses deductible for corporate tax? Entertainment spending isn't treated like ordinary costs and can be partly restricted. We haven't confirmed the exact percentage from the legislation for this post, so check the Ministry of Finance decision on non-deductible expenditure before claiming it.
Is depreciation deductible for UAE corporate tax? Capital assets are not deducted in full when bought; relief comes over time through depreciation, following the company's accounting treatment and the corporate tax rules. Keep an asset register that ties each item to its invoice.
How is taxable income calculated from accounting profit? Taxable income starts with accounting net profit under the company's accounting standard, then adjusts for items the corporate tax law treats differently. A personally paid expense that is properly booked flows through the accounts and then through that adjustment process like any other cost.
About Qawi
About Qawi · Qawi is a corporate services firm licensed in the Sharjah Media City (SHAMS) free zone, handling company formation, visas and PRO, bookkeeping, VAT and corporate tax for UAE businesses. Guides are researched from FTA, Ministry of Finance and free zone sources. Qawi on LinkedIn
Sources
- Federal Tax Authority: Corporate Tax FAQs
- Federal Tax Authority: Corporate Tax Guide, Determination of Taxable Income (31 July 2024)
- Federal Tax Authority: FTA Decision No. 17 of 2026
- Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, Articles 28 and 56
Last checked: 05 November 2026
This is general information, not tax or legal advice for your specific situation.