Website Last updated:

May 15, 2026

This guide clarifies the accepted accounting standards for UAE Corporate Tax, as mandated by Article 20. It establishes IFRS as the primary standard, allowing IFRS for SMEs for entities with Revenue under AED 50 million. The guide explains the distinction between the Accrual and Cash Basis of Accounting for calculating Taxable Income. It further details the procedural election to use the realisation basis for gains and losses, and clarifies accounting adjustments for non-arm's length transactions under Article 34 and for specific reliefs such as transfers within a Qualifying Group (Article 26).

Accounting Standards and Interaction with Corporate Tax

Corporate Tax Guide | CTGACS1

November 2023

1. Glossary

2. Introduction

2.1. Overview
2.2. Purpose of this guide
2.3. Who should read this guide?
2.4. How to use this guide
2.5. Legislative references
2.6. Status of this guide

3. Accepted Accounting and Reporting Standards

3.1. IFRS
3.2. IFRS for SMEs
3.3. Accounts not prepared under IFRS or IFRS for SMEs
3.4. Determination of amount and timing of Revenue and expenditure
3.5. Financial Statements of a Tax Group
3.6. Audit requirement for Financial Statements

4. Accounting Methods

4.1. Accrual Basis of Accounting
1. 4.1.1. Revenue and expenditure recognition
4.2. Cash Basis of Accounting
1. 4.2.1. Eligibility
  4.2.2. Revenue and expenditure recognition
  4.2.3. What are exceptional circumstances?
  4.2.4. Calculation of the threshold for using Cash Basis of Accounting
  4.2.5. Fluctuations in Revenue: switching to/from Accrual Basis of Accounting
  4.2.6. Interaction with Small Business Relief

5. Realisation basis of accounting

5.1. Realised versus unrealised
1. 5.1.1. Fair value accounting
  5.1.2. Impairment
5.2. Realisation basis for Corporate Tax purposes
1. 5.2.1. What constitutes realisation?
  5.2.2. Election to use the realisation basis for Taxable Persons other than Banks or Insurance Providers
  5.2.3. Election to use realisation basis for Banks and Insurance Providers
  5.2.4. Timeline for making the election to use the realisation basis
  5.2.5. Revocation of election to use realisation basis in exceptional circumstances
  5.2.6. Effect of applying realisation basis to Taxable Income
  5.2.7. Definition of capital account

6. Other Adjustments to Accounting Income

6.1. Transactions with Related Parties
1. 6.1.1. Consideration in excess of Market Value
  6.1.2. Consideration lower than Market Value
6.2. Transfers within a Qualifying Group
6.3. Business Restructuring Relief
6.4. Gains and losses not recognised in the income statement
6.5. Cost Method of Accounting to replace Equity Method of Accounting
6.6. Other adjustments
1. 6.6.1. No deduction for expenditure which does not qualify for relief under general tax deduction rules
  6.6.2. Capital expenditure

7. Adjustments under the transitional rules

Contents