Under Section 17 of the Income Tax Ordinance, any expense incurred wholly and exclusively for generating business revenue is recognized for tax deduction purposes.

6 Core Expense Categories Recognized for Tax Deduction:

1. Home Office Operating Expenses

Proportional deduction of electricity, municipal rates (Arnona), internet, and water bills (typically 25% to 33% if operating from home).

2. Professional Fees & Software Subscriptions

100% deduction for CPA fees, legal counsel, cloud software, hosting, domain registration, and CRM tools.

3. Advertising, Marketing & Design

100% deduction for Google Ads, Meta campaigns, website development, print branding, and exhibition stands.

4. Vehicle & Transportation Expenses

45% deduction for private/light vehicles or 100% deduction for heavy commercial vehicles (>3.5 tons).

5. Professional Training & Literature

Deduction for industry seminars, professional courses, textbooks, and trade subscriptions maintaining existing skills.

6. Travel & Client Hospitality

Domestic business travel, foreign business trips within statutory per-diem caps, and client refreshments (80% recognized).

๐Ÿ’ก Critical Tax Rule: Duality of Purpose: Expenses serving both personal and business purposes must be split reasonably with clear accounting documentation.