UAE: Guide on interaction of accounting standard with corporate tax

The UAE federal tax authority issued a guide on the interaction of accounting standards with corporate tax.

Guide on interaction of accounting standard with corporate tax

Article Posted date 08 November 2023

The UAE federal tax authority on 6 November 2023 issued a guide on the interaction of accounting standards with corporate tax.

The guide, which is not legally binding, provides a general overview of the following issues:

  • Accepted accounting and reporting standards (i.e., International Financial Reporting Standards (IFRS), and IFRS for small- and medium-sized enterprises if certain requirements are met)
  • The basis for the preparation of financial statements of a tax group
  • Accounting methods (accrual basis versus cash basis)
  • The main adjustments to accounting profit or loss to determine the taxable income
  • The calculation of the tax basis of assets and liabilities under the transitional rules

The guide also provides several examples of the following adjustments:

  • Adjustments derived from applying the realization basis for corporate tax purposes, and tax depreciation
  • Adjustments under the transitional rules
  • Adjustments due to related-party transactions and transfers within a qualifying group
  • Adjustments derived from gains or losses recorded in the statement of other comprehensive income
  • Adjustments to replace the effect of the equity method of accounting, if applied, with the effect of the cost method of accounting for corporate tax purposes

Read a November 2023 report prepared by the KPMG member firm in the UAE

 

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