A UAE restaurant is a 5% VAT business on nearly every sale and a 9% corporate tax business on profit above AED 375,000 — the compliance work is not the rates, it is the volume of small transactions and the F&B-specific deductions that most operators get wrong.
TL;DR
- The 9% corporate tax rate applies to taxable income above AED 375,000 under Federal Decree-Law No. 47 of 2022; below that, the rate is 0%.
- Food and beverages are standard-rated at 5% VAT; exports of food and international catering can qualify for the 0% rate under Federal Decree-Law No. 8 of 2017.
- Employee canteen meals are generally treated as a benefit in kind and not recoverable input VAT under the FTA's VAT treatment rules.
- Delivery apps and aggregators complicate revenue recognition: commission, marketing fees and customer-paid VAT each hit different lines.
- Registration deadlines are tied to licence issuance month under FTA Decision No. 3 of 2024; late registration carries an AED 10,000 penalty.
The corporate tax picture for restaurants
The corporate tax law does not have a restaurant-specific section. What makes F&B different is the pattern of costs and the mix of adjustments that apply to a high-volume, low-margin, cash-and-card business:
| Item | Treatment | Reference |
|---|---|---|
| Taxable income up to AED 375,000 | 0% rate | Article 5, Federal Decree-Law No. 47 of 2022 |
| Taxable income above AED 375,000 | 9% rate | Article 5, Federal Decree-Law No. 47 of 2022 |
| Small Business Relief (revenue ≤ AED 3m) | Optional election; 0% until 31 December 2026 | Article 21, Federal Decree-Law No. 47 of 2022 |
| Business entertainment (client meals, events) | 50% of the input VAT and cost is disallowed | Article 28, Federal Decree-Law No. 47 of 2022 |
| Employee meals provided on-site | Generally a benefit in kind; VAT input recovery restricted | FTA VAT treatment guidance |
| Food waste and spoilage | Deductible as a business expense if documented | General deduction rules, Article 28 |
Small Business Relief is the first decision
If your F&B group's revenue does not exceed AED 3 million in the relevant period, you can elect Small Business Relief and pay 0% until 31 December 2026. This is an election, not automatic — make it on the return. Larger groups with multiple branches should aggregate revenue across the group before deciding.
Entertainment add-backs are the biggest trap
Client dinners, opening events and influencer meals are typically 50% disallowed for corporate tax purposes under Article 28, and the related input VAT is also restricted. Staff meals are a different category — food provided to employees in a canteen is usually a taxable benefit in kind under the FTA's guidance, which affects both VAT recovery and employment-side treatment. Keep a separate ledger account for entertainment so the add-back is a one-line adjustment, not a forensic exercise.
VAT on restaurant sales
| Supply | VAT treatment |
|---|---|
| Dine-in food and beverages | Standard 5% |
| Takeaway and delivery in the UAE | Standard 5% |
| Export of food (with evidence of export) | 0% |
| Catering supplied and consumed outside the UAE | Generally outside the scope of UAE VAT or 0% where the place of supply rules take it out |
| Complimentary meals to staff | Deemed supply where the FTA's rules apply; input VAT recovery restricted |
| Sale through delivery apps | VAT on the food portion; the platform's commission is a separate standard-rated supply to you |
Two practical rules prevent most restaurant VAT errors. First, the 5% covers food and beverages consumed in the UAE — the 0% rate applies only where the strict export conditions in Article 45 are met, such as documented international transport of the goods. Second, a full tax invoice is required for supplies over AED 10,000 or to VAT-registered customers; retail receipts below AED 10,000 to non-registered customers can be simplified tax invoices under the Executive Regulations of Federal Decree-Law No. 8 of 2017.
What this means operationally
- POS configuration: map every menu category to the correct VAT rate and keep the export/catering flows on separate item codes so the return pulls clean numbers.
- Delivery platform statements: reconcile the app's gross payout to the food revenue, commission expense and VAT lines every month — the app's statement, your invoice and the bank settlement rarely agree without adjustment.
- Suppliers: most food imports are zero-rated at import stage with VAT paid via customs; reclaiming it requires the customs declaration to be in the company's name.
- Records: keep POS Z-reports, delivery platform statements and supplier invoices for seven years under Article 56 of Federal Decree-Law No. 47 of 2022.
Registration and deadlines
Registration is mandatory for every taxable person and is done on EmaraTax; the deadline depends on the month your trade licence was issued under FTA Decision No. 3 of 2024. If you are not yet registered, the month-by-month table is in our corporate tax registration guide. The CT return is due within nine months of the financial period end (Article 53).
For the bookkeeping side of the same questions — POS reconciliation, delivery app statements and daily cash — see bookkeeping for restaurants in the UAE.
How Finanshels handles this
We run restaurant books end to end: POS and delivery-platform reconciliation, VAT returns with correct treatment of staff meals and exports, and corporate tax returns with entertainment add-backs computed correctly. Book a free consultation if you want the compliance off your plate.
FAQs
Do restaurants pay corporate tax in the UAE?
Yes, at 9% on taxable income above AED 375,000. Restaurants with revenue up to AED 3 million can elect Small Business Relief and pay 0% until 31 December 2026, but the election must be made on the return.
Is there VAT on restaurant food in the UAE?
Yes — 5% standard rate on dine-in, takeaway and domestic delivery. The 0% rate applies only to qualifying exports under Article 45 of Federal Decree-Law No. 8 of 2017.
Can I recover VAT on staff meals?
Food provided free to employees is generally treated as a benefit in kind, and input VAT on it is not recoverable under the FTA's rules. Meals charged to employees or sold in a staff canteen follow normal supply rules.
What is the entertainment disallowance?
For corporate tax, 50% of business entertainment expenditure (including client meals and events) is disallowed under Article 28 of Federal Decree-Law No. 47 of 2022, and the related input VAT is similarly restricted.
Last reviewed: September 2026 by Gautam Sanoj, Associate Manager – Tax Advisory, Finanshels. Rules as of Federal Decree-Law No. 47 of 2022, Federal Decree-Law No. 8 of 2017 and FTA Decision No. 3 of 2024; verify current thresholds against the FTA (tax.gov.ae) before acting.
