Guide on application of accounting standards for corporate tax

The Federal Tax Authority (FTA) has issued a Guide covering general recommendations on the application of accounting standards for purposes of the corporate tax. 

When preparing financial statements, taxable persons are required to rely on the accounting standards adopted in the UAE that are regulated by the Ministerial Decision No. 114 of 2023:

1. International Financial Reporting Standards - IFRS;
2. International Financial Reporting Standards for SMEs (for revenues up to AED 50 million) - IFRS for SMEs.

In the new FTA Guide, an overview of the following issues can be found:

• preparation of financial statements;
• cash accounting method;
• implementation of the accounting method;
• other amendments under section 20(2)(i) of the Taxation of Corporations and Businesses law;
• transitional adjustments.

The FTA Guide states that non-compliance with these accounting standards is subject to administrative fines:

• AED 10,000 for each violation;
• AED 20,000 for repeated violations within a year.

Cabinet Resolution No. 75 of 2023 the Administrative Penalties for Violations Related to the Application of of Federal Decree Law No...