Corporate Tax for Restaurants in the UAE

Food and beverage has no separate corporate tax regime. A restaurant is taxed on its taxable income like any other business, and the difficulty sits in arriving at the right figures rather than in the rate.

What makes F&B different is the data problem behind those figures. High transaction volume, several revenue channels settling on different timetables, inventory that spoils, and cash outside the card rails. Each creates a gap between what happened and what got recorded, and the return is built on the record.

The taxable person is normally the licensed company. Where the business is run personally rather than through a company, the rules for sole proprietors and natural persons apply instead, and only above AED 1,000,000 of business turnover in a calendar year.

Registration and filing apply whether or not any tax is payable. A restaurant that ends the year below the nil-rate band still registers and still files. Corporate tax registration is not conditional on owing anything.

Four things account for most of the corrections I see in F&B files. Testing relief against profit instead of revenue, booking delivery payouts as revenue, treating everything on the guest bill as income, and assuming every cost comes off in full.

Relief is tested on revenue, not on profit

The Small Business Relief ceiling is AED 3,000,000 of revenue. The AED 375,000 band is a rate band applied to taxable income. Two different numbers doing two different jobs, and confusing them is the single most consequential error in F&B.

Restaurants are exposed to this in a way that professional services firms are not. Revenue is large relative to margin. An operator can be genuinely small in profit terms and comfortably above the relief ceiling in revenue terms, which means the business feels small and tests large.

As an illustration with rounded figures: a casual dining restaurant turning over AED 3.4 million at a 9% net margin produces roughly AED 306,000 of profit. That sits below the AED 375,000 band, so the tax on it would be nil either way. But at AED 3.4 million of revenue the business is above the AED 3,000,000 ceiling, so Small Business Relief is not available to it at all. The owner who assumed relief applied because the profit was small was testing the wrong number.

The reverse happens too. A restaurant booking only its delivery payouts rather than gross sales can show revenue below AED 3,000,000 while its actual revenue is above it. Relief then gets elected on a figure that will not survive examination.

Not everything on the guest bill is your revenue

Amounts added to a bill and collected on behalf of someone else are not automatically the restaurant’s income. Where the restaurant is collecting as an agent rather than on its own account, the amount may sit outside revenue entirely.

That distinction feeds straight into the number used for the relief test. A business sitting close to AED 3,000,000 can land on either side of the ceiling depending on how these amounts are treated.

The treatment depends on the specific arrangement behind each charge, and it should be reviewed against the actual terms rather than assumed from what other restaurants do. This is one to settle before the return is built, not after.

Delivery platform payouts are not revenue

The platform collects the full amount from the guest, deducts its commission, and remits the balance. Your revenue is the gross value of the sale. The commission is a separate deductible cost.

Booking the payout as a single revenue line understates both sides of the profit and loss at once, and understates revenue for the relief test. Take a restaurant putting AED 680,000 of sales through platforms at commission rates around a third. That is roughly AED 238,000 of cost invisible on one side and the same amount missing from revenue on the other.

One detail I check on every first return: whether the commission was recorded net or gross of VAT. A bookkeeper who posted the platform invoice at the net amount has understated the expense and the recoverable input VAT simultaneously. The fix is to record the gross invoice as the cost and identify the VAT element separately.

The same reconciliation problem shows up on card settlements and on discount campaigns the platform runs. In each case, the money that lands is not the money that was earned.

Not every cost comes off in full

The general test under Article 28 is expenditure incurred wholly and exclusively for the business and not capital in nature. Entertainment, amusement and recreation expenditure is capped at 50% under Article 32.

For an F&B operator the practical line runs between ordinary operating and staff costs, which are not caught, and hosting external parties, which is. Meals provided to your own team as part of the employment arrangement are an employment cost, deductible in full.

Complimentary meals and hosted tastings sit less comfortably. My working position is that comps given to critics, influencers and media contacts are entertainment expenditure and restricted accordingly. A staff discount is a revenue matter rather than an expense one. That position depends on who receives the meal and why, so in my files each arrangement gets its own note rather than a rule of thumb.

Wastage is fully deductible and frequently undocumented. A restaurant with an estimated figure and no daily log is claiming a deduction it cannot evidence. A five-minute daily record fixes that.

Registration and filing obligations run regardless of the outcome, and the dates are covered in our guide to corporate tax filing deadlines.

Not sure what your real revenue figure is? Before the return is built, I can reconcile your channels and test the number against the relief ceiling, so the election is made on a figure that holds. Book a free consultation.

Five steps, in order. Each one has to be complete before the next produces a reliable answer.