Accounting in the UAE must now be accordance with International Financial Reporting Standards

The UAE has unified the rules and regulations regarding accounting - only International Financial Reporting Standards (IFRS) can be used. This rule is stipulated in the UAE Ministry of Finance Ministerial Decision No. 114 of 2023. This decree sets forth to regulate accounting for corporate taxation.

Corporations must produce four different IFRS statement forms including a balance sheet of assets, cash flows, comprehensive income and changes in equity.

The parent company of a tax group must prepare consolidated financial statements taking into account the income of each of its subsidiaries. Movements of funds between organisations that are part of the same tax group are excluded from the taxable base.

A new 9% corporate tax rate came into effect June 1, 2023, that must be paid by companies and entrepreneurs whose income exceeds AED 375K (USD 102K). Businesses making less than this amount remain in the 0% corporate tax bracket.

Regardless of the amount of income earned, anyone conducting business in the UAE must file financial reports. In order to do so, the company or entrepreneur must first register with the Federal Tax Service and receive their own individual tax number.

FInancial statements for each tax period must be submitted no more than 9 months from the end of that period. There are two fiscal years in the UAE - January 1 to December 31 and June 1 to May 31. The deadlines to file reports therefore fall on September 30 and February 28 (or February 29 when applicable).

By introducing corporation taxation that meets international standards and regulations, the UAE will further solidify its status as a leading global jurisdiction for business and investment.

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