Page 13 - ICAI UAE TAX UPDATE_APRIL 2024

Transaction Fiscally Transparent Fiscally Opaque
7. Salary paid to • Not deductible in the hands of partners as • Not deductible as it is treated as
partners it is treated as amount withdrawn from the profit distribution to the owner.
business. • Will not be taxable in the hands
• Shall be included in the determination of of partner as it is already taxed at
taxable income of the partner. partnership level.
8. Reimbursement • such reimbursed costs would be deductible • Partnership can claim the deduction
of expenditure to by the partners in proportion to their distributive of an amount reimbursed to the partner.
partners share.

• The partners are allowed to set off their expenditure against the reimbursement.

9. Carry forward of • Not Relevant. • The tax loss which is carried forward
Tax Loss can only be utilized to offset the taxable
income of the partnership and not
the partners.
• No portion of the tax loss will be
allocated to exiting partner.

10. Foreign Tax Credit • Is allocated among the partners in their • Credit can be availed by the
distributive share. partnership.

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