UAE Ministerial Decision No. 126 of 2023 on General Interest Deduction Limitation Rule

The Ministry of Finance (MoF) has issued Ministerial Decision No. 126 of 2023 on the General Interest Deduction Limitation Rule for the purposes of Corporate Tax Law. The decision explains that net interest expenditure up to AED 12 million is not subject to an interest limitation of 30%.

Some of the Key highlights of the decision:

1. The decision specifies that the net interest expenditure that can be deducted is capped at the higher of 30% of adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) or a safe harbour amount of AED 12 million.
2. The Tax Group having Banks and Insurance Providers as member, must exclude these member’s income and expenditure from the calculation of net interest expenditure and EBITDA of the Tax Group.
3. A Qualifying Infrastructure Projects meeting the relevant conditions, will be free from interest expenditure deductibility under the General Interest Deduction Limitation Rule.
4. Interest incurred on debt instruments prior to 9^th December 2022 will not be subject to interest limitation rule.