29 August 2026 · Dubai SME
Loan Interest Deductibility for Dubai SMEs
For most Dubai SMEs, business-loan interest is fully deductible for corporate tax, because their Net Interest Expenditure is well under the AED 12 million safe harbour, so the 30% EBITDA cap never applies. The cap only matters for heavily financed or leveraged businesses. Interest paid to related parties is subject to a separate specific rule and the arm's length principle.
Exiloz Management & Tax Consultant · Dubai-based FTA-focused advisory · VAT, corporate tax & accounting
Most SMEs deduct in full
The safe harbour covers ordinary borrowing.
- Net interest under AED 12m is fully deductible.
- The 30% cap does not apply below the threshold.
- Ordinary bank loans rarely hit the cap.
- Keep the interest genuinely business-related.
When it gets complex
Leverage and related loans need care.
- Heavily financed businesses may hit the cap.
- Related-party loans face a separate rule (Article 31).
- Owner/connected-person loans must be arm's length.
- Personal borrowing is not deductible.
Related guides
Frequently Asked Questions
For Dubai owner-managed businesses.
Is my business loan interest deductible?
Usually yes. Most Dubai SMEs have net interest under AED 12m, so it is fully deductible and the 30% cap does not apply.
What about interest on a loan from my company owner?
Related-party and connected-person loan interest faces a separate specific rule and must be at arm's length.
Is personal loan interest deductible?
No. Only genuine business-related interest is deductible for corporate tax.
Can Exiloz review my interest deductions?
Yes. We confirm your interest is deductible and structured correctly.
Is your interest deductible?
Exiloz confirms your Dubai business is deducting loan interest correctly.