15 July 2026 · Safe Harbour
The AED 12 Million De-Minimis
The general interest deduction limitation rule builds in a safe harbour: if your Net Interest Expenditure for the tax period is AED 12 million or less, the 30% EBITDA cap does not apply at all, and the interest is fully deductible without any EBITDA calculation. The AED 12 million figure is not a ceiling on top of the 30% test — it is a floor, because your actual deductible cap is always the higher of 30% of tax-adjusted EBITDA or AED 12 million. This is why the large majority of Dubai SMEs, whose net interest sits well below the threshold, never need to run the EBITDA calculation at all.
Exiloz Management & Tax Consultant · Dubai-based FTA-focused advisory · VAT, corporate tax & accounting
A floor for the deduction
Every business, whatever its EBITDA, can deduct net interest up to AED 12 million without restriction. Below that line the 30% cap is irrelevant — there is nothing to calculate, because the de-minimis alone protects the deduction. Above the line, the comparison switches on: your cap becomes the higher of 30% of tax-adjusted EBITDA and AED 12 million, so the de-minimis keeps working as a floor even once you cross it.
- Net interest of AED 12 million or less is fully deductible, no EBITDA test required.
- The AED 12 million figure applies per taxable person for the tax period.
- The cap is always the higher of 30% of EBITDA and AED 12 million, never just one or the other.
- Most Dubai SMEs sit comfortably below the threshold in a normal trading year.
- The de-minimis is not automatically apportioned for short or unusual periods without specific consideration.
- Crossing the threshold does not disallow all your interest — only the amount above the higher of the two figures.
Above AED 12 million
Once Net Interest Expenditure exceeds AED 12 million, the safe harbour stops protecting the whole amount and the 30% EBITDA calculation becomes necessary. At that point you compare 30% of tax-adjusted EBITDA against the AED 12 million floor and take whichever is higher as your actual cap. Anything above that cap is disallowed for the period, though it is not lost permanently — it carries forward for use in a future period with headroom.
- Above AED 12 million net interest, calculate 30% of tax-adjusted EBITDA.
- Your cap is the higher of that 30% figure and AED 12 million.
- Net interest above the cap is disallowed for the current tax period.
- Disallowed interest carries forward for up to ten tax periods.
- High-EBITDA businesses may find the 30% figure comfortably exceeds AED 12 million anyway.
Why most Dubai SMEs never calculate the cap
For a typical Dubai trading, services or consultancy business with a working-capital facility or a modest asset-finance loan, net interest for the period rarely approaches AED 12 million — that figure is large relative to the borrowing most SMEs carry. That means the safe harbour on its own is usually enough to protect the full deduction, and the business never needs to compute tax-adjusted EBITDA for interest-cap purposes at all. The businesses that do need to run the calculation every period are the exceptions: real-estate developers, asset-heavy operators and groups with significant intercompany funding, where net interest can run into eight figures.
- Ordinary bank facilities for working capital rarely generate AED 12 million of net interest.
- The safe harbour removes the need for an EBITDA calculation entirely for most SMEs.
- Leveraged sectors — real estate, construction, asset finance — are far more likely to exceed the threshold.
- Even businesses near the threshold should re-test every period, since borrowing and interest income both change.
Monitoring the AED 12m line
A business sitting close to the AED 12 million threshold should not treat one comfortable year as permanent safety. New borrowing, a refinancing at a higher rate, or the loss of interest income that used to net down the figure can all push net interest over the line without warning. Reviewing the position before each filing — not just at year-end close — gives you time to plan around the cap rather than discover it after the return is due.
- Re-test net interest against AED 12 million every tax period, not just once.
- New financing or refinancing can move the figure quickly.
- A drop in interest income effectively raises your net interest figure.
- Early monitoring gives time to plan, rather than reacting after year-end.
Frequently Asked Questions
For businesses sitting near, at, or just above the AED 12 million line, here is what actually changes once you cross it.
Do I need the 30% calculation if my interest is small?
No. If your Net Interest Expenditure for the tax period is AED 12 million or less, the 30% cap simply does not apply and there is no EBITDA calculation to run. You still need to confirm the net interest figure itself is correct, but nothing further is required once it is under the threshold.
Is the AED 12m per company or per group?
It applies per taxable person for the tax period. Where companies have formed a UAE corporate tax group, the group is treated as a single taxable person, so the de-minimis and the 30% cap are assessed on the group's combined position rather than company by company.
Is the de-minimis the deduction limit?
Not on its own. The actual limit is the higher of 30% of tax-adjusted EBITDA and AED 12 million, so the de-minimis operates as a floor rather than always being the ceiling. A business with strong EBITDA relative to its borrowing may have a cap well above AED 12 million.
Can Exiloz confirm I'm under the threshold?
Yes. We calculate your Net Interest Expenditure for the period and confirm whether it falls within the AED 12 million safe harbour, so you know before filing whether the 30% calculation is even needed.
What happens the first period I go over AED 12 million?
You move from a straightforward safe-harbour position to needing a full 30% tax-adjusted EBITDA calculation for that period, and every period after until net interest falls back under the threshold. It is worth reviewing the position in advance if you know a large financing is coming.
Does the AED 12 million reset each year?
The de-minimis is tested fresh against Net Interest Expenditure for each tax period — it is not a cumulative allowance that depletes over time. A business can be under the threshold one year and over it the next, and vice versa.
Can I choose to apply the 30% test even if I'm under AED 12 million?
There is no need to. Below the AED 12 million threshold, the de-minimis alone secures full deductibility, so running the EBITDA calculation adds work without changing the outcome.
Does a short or unusual tax period change the AED 12 million figure?
Businesses with a non-standard tax period should have their specific position reviewed, since the mechanics around the de-minimis assume a normal tax period. Exiloz checks this as part of confirming your safe-harbour position.
Confirm your AED 12 million position
Exiloz calculates your Net Interest Expenditure for the period and confirms whether the AED 12 million safe harbour keeps your interest fully deductible — and if you're close to the line, we tell you before it becomes a filing problem.