Corporate Tax Impact on Owner's Salaries The consultation document on CT clarifies that the salaries or incomes withdrawn by owners/directors/managers will be deductible expense for the purpose of corporate tax. It means that the income of such company will be taxed after deduction of such salaries. In many cases the owners/directors companies especially SMBs (small & medium businesses) may not be getting regular salaries from the company instead they may be withdrawing funds as and when needed or not withdrawing at all. We suggest that the connected persons (owners/directors/managers) should formalize the process of getting salaries from the companies they own or are connected with by considering the following: - The salaries should be inline with the market norms - A clear agreement should be available. If applicable Labor Agreement should be updated to reflect the exact amount. - The salary should either be formally paid to such person’s bank account by means of WPS, bank salary transfer or accrued in the books of account as salary payable. Incorporating the above practices will show that such amounts are not being declared as salaries only to get benefits, instead they are actual compensation paid by the company to its owners in respect of services being provided.