If a Taxable Person’s Net Interest Expenditure is greater than AED 12 million and their adjusted EBITDA is negative for a Tax Period, how much of their Net Interest Expenditure may they deduct?
If a Taxable Person’s adjusted EBITDA is negative for a Tax Period, their adjusted EBITDA is considered to be AED 0 for the purposes of the General Interest Deduction Limitation Rule.
Under the General Interest Deduction Limitation Rule, a Taxable Person may deduct their Net Interest Expenditure up to the greater of the de minimis (AED 12 million) or 30% of their adjusted EBITDA.
On this basis, a Taxable Person that has Net Interest Expenditure greater than the de minimis of AED 12 million and has negative adjusted EBITDA for a Tax Period would be able to deduct AED 12 million of Net Interest Expenditure.
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