The direct costs attributable to producing the goods or services your business sells. Accurately calculating COGS is essential for gross profit reporting and corporate tax deduction claims in the UAE.
COGS is deducted from revenue to give gross profit. It does not include indirect costs like rent, marketing, or management salaries — those sit in operating expenses below the gross profit line. Calculating COGS accurately is critical for two reasons in the UAE: it determines your gross margin (which drives pricing and investor conversations) and it is a directly deductible expense in your corporate tax return. COGS is often confused with total operating costs; the distinction matters significantly in tax planning.
