How to Prepare the Financial Statements for the UAE Corporate Tax?
The businesses are required to prepare the financial statements using accounting standards and principles that are accepted in the UAE. It is imperative to use the financial accounting period as the (annual) tax period. There are no capital gains taxes unless the company is taxable under another income tax. Corporate tax rules are due to change from 1 June 2023, when the plan is to introduce a federal corporation tax at 9% for businesses with net profits of AED 375,000 or more. A business that does not have a financial accounting period can use the Gregorian calendar year as its default tax period. You can consult with the corporate tax consultants in Spancom to plan to determine the accounting standards and accounting period
Should Businesses Use the International Financial Reporting Standards?
Most businesses in the UAE use the International Financial Reporting Standards for preparing their financial statements. However, the government may allow alternative financial reporting standards and mechanisms for determining taxable income to accommodate and reduce the compliance costs for certain. Corporate tax advisors in Spancom technologies can provide you with further insights on the use of International Finance Reporting Standards (IFRS) or other alternative standards. Who needs to use IFRS? IFRSs required in both the consolidated and separate company financial statements of unlisted financial institutions and all large unlisted limited liability entities. Other unlisted companies are permitted to use IFRS. Here, IFRS provides a common accounting language so businesses and their financial statements are consistent and reliable across companies and countries.
