Ministerial Decision Ministerial Decision No. 126 of 2023 Ministry of Finance

MD 126/2023 — General interest deduction limitation rule

Ministerial Decision No. 126 of 2023 on the General Interest Deduction Limitation Rule for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses

In force Issued 23 May 2023

Official Arabic text (opens in a new tab) English translation (unofficial) (opens in a new tab)

Official Arabic title
قرار وزاري رقم (126) لسنة 2023 — القاعدة العامة لقيود خصم الفائدة لأغراض المرسوم بقانون اتحادي رقم (47) لسنة 2022 في شأن الضريبة على الشركات والأعمال
Document type
Ministerial Decision
Number
126
Issued by
Ministry of Finance
Administered by
Federal Tax Authority
Issued
23 May 2023
Entry into force
Effective from the day following its publication (Art. 15); the Official Gazette publication date is not stated in the text. Issued 23 May 2023.
Applies to
Taxable Persons with net interest expenditure, including Tax Groups, Exempt Persons' taxable businesses and infrastructure project companies.
Current position
In force.
Topics
Corporate Tax ·
Official text
Official Arabic text · English translation (unofficial)

Factual summary

Sets out how the general interest deduction limitation rule in Art. 30 of the Corporate Tax Law works. It defines Interest broadly, sets an AED 12,000,000 de minimis below which the limit does not apply (and above which the higher of AED 12,000,000 and the Art. 30 percentage is deductible), and defines tax EBITDA. Debt agreed before 9 December 2022 and qualifying infrastructure projects are outside the rule, and the decision sets how carried-forward interest moves within Tax Groups.

What it means in practice Professional insight

Who: borrowers whose net interest expenditure may exceed AED 12,000,000 in a Tax Period. What to check: what counts as Interest, the EBITDA calculation, grandfathered pre-9 December 2022 debt, and carried-forward amounts in Tax Groups.

Key provisions

  • Arts. 2–7 For the General Interest Deduction Limitation Rule, Interest includes the interest component of debt instruments, repurchase and stock-lending agreements, securitisations, finance leases and factoring, fees for raising finance (guarantee, arrangement, commitment fees) and related hedges, the interest-equivalent on Islamic Financial Instruments, the finance element of finance and non-finance leases, foreign exchange movements on Interest, and capitalised Interest.
  • Art. 8 The limitation in Art. 30(1) of the Corporate Tax Law does not apply where Net Interest Expenditure for the Tax Period does not exceed AED 12,000,000; above that, the Taxable Person may deduct the higher of AED 12,000,000 and the percentage in Art. 30(1); the amount is prorated for a Tax Period longer or shorter than 12 months.
  • Art. 9 EBITDA is the greater of AED 0 and Taxable Income under Art. 20, adding back Net Interest Expenditure, depreciation and amortisation taken into account in Taxable Income, and Interest on historical financial assets or liabilities held prior to 9 December 2022; Interest of exempt Qualifying Infrastructure Projects is excluded, and capitalised Interest is counted as it is amortised.
  • Art. 11 Debt instruments and other liabilities whose terms were agreed prior to 9 December 2022 (and hedges solely for their interest rate risk) are outside the rule; undrawn principal counts only where the lender was legally obliged to advance it, and the excluded Net Interest Expenditure is the lower of the actual amount and the amount under the terms as they stood on 9 December 2022.
  • Art. 12 In a Tax Group, a joining Subsidiary's carried-forward Net Interest Expenditure may be used only against the group's Taxable Income attributable to it; the group keeps its carried-forward amounts when a Subsidiary leaves; on cessation they stay with the Parent Company if it remains a Taxable Person; a Bank or Insurance Provider member outside the rule is disregarded.
  • Art. 14 Net Interest Expenditure of a Qualifying Infrastructure Project Person on a Qualifying Infrastructure Project is outside the rule; the project must be exclusively for the public benefit of the State, for transport, utilities, education, healthcare or another service specified by the Minister, with assets lasting not less than 10 years or another period specified by the Minister, all assets in the State and all Interest arising in the State.

What changed

  1. 23 May 2023 Issued
  2. Entry into force: Effective from the day following its publication (Art. 15); the Official Gazette publication date is not stated in the text. Issued 23 May 2023.

Relationship chain

Law → decisions made under it → amendments → guidance and announcements; oldest first within each level.

  1. 3 October 2022 Federal Decree-Law FDL 47/2022 — Corporate Tax Law In force — amended
    1. 30 December 2022 Cabinet Decision CD 116/2022 — AED 375,000 rate band — Made under Art. 3(1) In force
    2. 10 March 2023 Ministerial Decision MD 43/2023 — Persons that do not register for Corporate Tax — Made under it In force
    3. 29 March 2023 Ministerial Decision MD 68/2023 — Government Entity businesses treated as a single Taxable Person — Made under Art. 5(6) In force
    4. 3 April 2023 Ministerial Decision MD 73/2023 — Small Business Relief — Made under Art. 21 In force — amended
      1. August 2023 Official guide FTA guide CTGSBR1 — Small Business Relief — Official guide Current version
      2. 29 July 2026 Ministerial Decision MD 131/2026 — SBR extended to 2029 — Amends Art. 2(2) In force
        1. 7 August 2026 Official announcement MoF news 7 Aug 2026 — SBR to 2029 — Announcement Current version
    5. 7 April 2023 Cabinet Decision CD 37/2023 — Qualifying Public Benefit Entities (list updated September 2026) — Made under it In force — amended
    6. 7 April 2023 FTA Decision FTA Decision 5/2023 — When a Corporate Tax period can be changed — Made under Art. 58 In force
    7. 7 April 2023 FTA Decision FTA Decision 6/2023 — Deadline to deregister for Corporate Tax — Made under Art. 52(1) In force
    8. 7 April 2023 FTA Decision FTA Decision 7/2023 — Exempt persons' registration and exemption applications (repealed) — Made under Art. 4(1) Repealed
    9. 10 April 2023 Ministerial Decision MD 82/2023 — Who had to prepare audited financial statements (repealed) — Made under Art. 54(2) Repealed
    10. 10 April 2023 Ministerial Decision MD 83/2023 — When a stranded individual does not create a Permanent Establishment — Made under Art. 14(7)(a) In force
    11. 27 April 2023 Ministerial Decision MD 97/2023 — Who must keep a transfer pricing master file and local file — Made under Art. 55(2) In force
    12. 4 May 2023 Ministerial Decision MD 105/2023 — When a Person stays exempt, or stops being exempt from a different date — Made under Art. 4(6) In force
    13. 8 May 2023 Cabinet Decision CD 49/2023 — When an individual's business is subject to Corporate Tax — Made under Art. 11(6) In force
    14. 9 May 2023 Ministerial Decision MD 114/2023 — Accounting standards and the cash basis for Corporate Tax — Made under Art. 20 In force
    15. 10 May 2023 Ministerial Decision MD 115/2023 — Private pension and social security funds — Made under Art. 4 In force
    16. 10 May 2023 Ministerial Decision MD 116/2023 — Participation exemption (repealed) — Made under Arts. 23, 24 Repealed
    17. 16 May 2023 Ministerial Decision MD 120/2023 — Transitional adjustments for assets held before the first Tax Period — Made under Arts. 20, 61 In force
    18. 22 May 2023 Ministerial Decision MD 125/2023 — Tax Group (repealed) — Made under Arts. 40–42 Repealed
    19. 23 May 2023 Ministerial Decision MD 126/2023 — General interest deduction limitation rule — Made under Art. 30 In force
    20. 24 May 2023 Ministerial Decision MD 127/2023 — Unincorporated partnerships, foreign partnerships and family foundations (repealed) — Made under Arts. 16, 17 Repealed
    21. 25 May 2023 Ministerial Decision MD 132/2023 — Transfers of assets and liabilities within a Qualifying Group — Made under Art. 26 In force
    22. 25 May 2023 Ministerial Decision MD 133/2023 — Business Restructuring Relief — Made under Art. 27 In force
    23. 29 May 2023 Ministerial Decision MD 134/2023 — General rules for determining Taxable Income — Made under Art. 20 In force
    24. 30 May 2023 Cabinet Decision CD 56/2023 — Non-resident nexus through UAE real estate (repealed) — Made under Arts. 11, 12 Repealed
    25. 30 May 2023 Cabinet Decision CD 55/2023 — Qualifying Income of a Qualifying Free Zone Person (repealed) — Made under Art. 18 Repealed
      1. 1 June 2023 Ministerial Decision MD 139/2023 — Qualifying and excluded activities for free zone persons (repealed) — Made under Arts. 1, 4 Repealed
    26. 10 July 2023 Cabinet Decision CD 75/2023 — Corporate Tax administrative penalties — Made under it In force — amended
      1. 22 February 2024 Cabinet Decision CD 10/2024 — AED 10,000 penalty for late Corporate Tax registration — Amends Art. 1 In force
    27. 18 July 2023 Cabinet Decision CD 81/2023 — Conditions for qualifying investment funds and REITs (repealed) — Made under Art. 10(1) Repealed
    28. 16 August 2023 FTA Decision FTA Decision 11/2023 — Annual declaration for exempt persons — Made under Art. 53(5) In force
    29. 16 August 2023 FTA Decision FTA Decision 12/2023 — Tax Groups of government-owned subsidiaries — Made under Art. 40(2) In force
    30. 16 August 2023 FTA Decision FTA Decision 13/2023 — Converting foreign-currency amounts to AED for Corporate Tax — Made under Art. 43 In force
    31. 25 October 2023 Cabinet Decision CD 100/2023 — Qualifying Income of a Qualifying Free Zone Person — Made under Art. 18 In force
      1. 27 October 2023 Ministerial Decision MD 265/2023 — Qualifying and excluded activities for free zone persons (repealed) — Made under Arts. 4, 7 Repealed
      2. 28 August 2025 Ministerial Decision MD 229/2025 — Qualifying and excluded activities for free zone persons — Made under Arts. 4, 7 In force
        1. 29 August 2025 Ministerial Decision MD 230/2025 — Recognised price reporting agencies for qualifying commodity trading — Made under it In force
        2. 22 December 2025 Ministerial Decision MD 336/2025 — Dubai VARA added as a Competent Authority for free zone fund and wealth management — Made under Art. 1 In force
        3. 2 June 2026 FTA Decision FTA Decision 6/2026 — Free-zone distributors: auditor's agreed-upon procedures report — Made under it In force
    32. 15 December 2023 FTA Decision FTA Decision 16/2023 — Registering unincorporated partnerships and partners' shares (repealed) — Made under Arts. 16, 51 Repealed
    33. 1 March 2024 FTA Decision FTA Decision 3/2024 — CT registration deadlines — Made under Art. 51(1) In force
    34. 13 August 2024 Public Clarification CTP003 — first Corporate Tax period — Clarifies Arts. 57–58 Current version
    35. 25 September 2024 FTA Decision FTA Decision 7/2024 — First Corporate Tax return and payment deadline moved to 31 December 2024 — Made under Arts. 48, 53 Spent
    36. 28 October 2024 Ministerial Decision MD 261/2024 — Unincorporated partnerships, foreign partnerships and family foundations — Made under Arts. 16, 17 In force
      1. 19 May 2025 FTA Decision FTA Decision 5/2025 — Compliance for partnerships and family foundations — Made under Art. 4(3) In force
    37. 9 December 2024 Ministerial Decision MD 301/2024 — Tax Group rules — Made under Arts. 40–42 In force
    38. 10 December 2024 Ministerial Decision MD 302/2024 — Participation exemption and foreign PE exemption — Made under Arts. 23, 24 In force
    39. 31 December 2024 Cabinet Decision CD 142/2024 — Top-up Tax on multinational enterprises (Pillar Two) — Made under it In force
      1. 28 March 2025 Ministerial Decision MD 88/2025 — OECD commentary and guidance adopted for the UAE top-up tax (repealed) — Made under it Repealed
      2. 22 June 2026 Ministerial Decision MD 96/2026 — Updated OECD commentary and guidance adopted for the UAE top-up tax — Made under it In force
      3. 16 July 2026 FTA Decision FTA Decision 12/2026 — Top-up Tax registration and deregistration — Made under it In force
      4. 3 August 2026 Ministerial Decision MD 133/2026 — Who files the Pillar Two Information Return — Made under it In force
    40. 25 March 2025 Ministerial Decision MD 84/2025 — Who must prepare audited financial statements for Corporate Tax — Made under Art. 54(2) In force
      1. 16 July 2025 FTA Decision FTA Decision 7/2025 — Audited aggregated financial statements for Tax Groups — Made under Art. 2(2) In force
    41. 27 March 2025 Cabinet Decision CD 34/2025 — Qualifying investment funds, REITs and qualifying limited partnerships — Made under Art. 10(1) In force
      1. 14 April 2025 Ministerial Decision MD 96/2025 — 10% minimum free float for REITs listed in May 2025 — Made under Art. 4(1) In force
      2. 18 September 2025 FTA Decision FTA Decision 8/2025 — Compliance deadlines for qualifying investment funds and their investors — Made under Arts. 2, 3, 4 In force
    42. 27 March 2025 Cabinet Decision CD 35/2025 — When a non-resident has a nexus in the UAE — Made under Art. 11(4)(c) In force
    43. 2 May 2025 Cabinet Decision CD 55/2025 — Exemption for foreign entities owned by exempt persons — Made under Art. 4(1) In force
    44. 14 May 2025 Cabinet Decision CD 63/2025 — Unincorporated Partnership taxed in its own right — Made under Art. 16(8) In force
    45. 23 June 2025 Ministerial Decision MD 173/2025 — Depreciation for investment property at fair value — Made under Art. 20(3) In force
    46. 31 December 2025 Cabinet Decision CD 215/2025 — Research and development (R&D) tax credit — Made under it In force
      1. 18 March 2026 Ministerial Decision MD 24/2026 — R&D tax credit rates, qualifying activities and expenditure rules — Made under Arts. 5, 6, 7 In force
    47. 12 January 2026 Cabinet Decision CD 1/2026 — Corporate Tax exemption for certain sports entities — Made under Art. 4(1) In force
    48. 8 September 2026 FTA Decision FTA Decision 15/2026 — Applying for Corporate Tax exemption — Made under Art. 51(2) In force

Official sources

Official Arabic text (opens in a new tab) English translation (unofficial) (opens in a new tab)

Related services: Corporate Tax

Last verified against official sources: 26 October 2026 · اقرأ بالعربية

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General information, not tax advice. Each record is checked against the official source; where they differ, the official Arabic text prevails.