I want to give employees stock options in the company — how does that work for tax?

UAE corporate tax (Federal Decree-Law No. 47 of 2022) has no separate, specific provision for employee stock option or equity incentive plans (ESOPs); what applies is the general deductibility rule — an expense genuinely and wholly incurred for the business is deductible in principle, provided it's properly documented and calculated. On the accounting side, the governing standard is IFRS 2 (Share-based Payment): for equity-settled plans, the cost is measured at grant-date fair value and spread over the vesting period; for cash-settled plans, the liability is remeasured every reporting period until settlement.

What matters is that the company defines the plan's structure clearly from the outset — real equity, options, or cash settlement tied to share value — because that structure determines how the accounting expense is calculated and when it's recognised, which in turn feeds the tax position. Since the Federal Tax Authority hasn't issued specific guidance on deducting this type of cost, the safer approach is to seek tailored advice before finalising the plan rather than assuming a particular treatment applies. RASEEKH helps you build the right structure from the start and document the accounting in a way that protects your tax position.