Definition

Tax Loss Relief allows UAE businesses to offset current or future taxable income with losses incurred in previous periods, reducing their overall Corporate Tax liability. It ensures companies that experience losses are not overburdened when profitability returns.

Key points

• Available under UAE Corporate Tax Law, subject to FTA rules.
• Up to 75% of taxable income in a future period can be offset using carried-forward tax losses.
• Losses can generally be carried forward indefinitely if continuity conditions are met.
• Not all losses qualify — for example, those arising from exempt income or related-party transactions.

Practical example

A UAE trading company records a tax loss of AED 300,000 in 2024. In 2025, it earns AED 400,000 in taxable income. The company can use AED 300,000 of the carried-forward loss to reduce taxable income to AED 100,000, lowering its corporate tax bill.

Why it matters

Tax Loss Relief helps businesses manage cash flow, incentivizes investment, and provides financial stability after challenging years.