Owner & Management Salary: How It's Treated Under Corporate Tax

UAE Corporate Tax law doesn't prohibit an owner from drawing a salary from their own company — but how that salary is treated for tax purposes depends entirely on whether it can be justified as genuine, arm's-length pay for real work.

A salary paid for genuine services is a deductible business expense, reducing taxable profit before the 9% rate applies. A dividend, by contrast, is a distribution of already-taxed profit and is never deductible. This makes the distinction financially significant, not just a bookkeeping label.

Because an owner-director is a "related party" to their own company, the FTA applies arm's-length testing under the same transfer pricing principles that govern any related-party transaction. A salary is deductible only up to what the work genuinely commands in the market — anything paid above that can be recharacterised as a disguised profit distribution and denied as a deduction, with penalties potentially following.

A number with no documentation behind it is exactly the number the FTA adjusts during a review.