Corporate Tax Filing in the UAE: Key Insights on Accounting Schedule & Adjustments

Accounting Schedule: An Overview

The Accounting Schedule is a disclosure-only part of the Tax Return and does not directly impact taxable income computation. It includes five key parts:

• Income Statement
• Statement of Other Comprehensive Income
• Statement of Financial Position
• Audit Requirements

Note: Financial statements must be prepared in accordance with IFRS, IFRS for SMEs, or the Cash Basis of Accounting (as applicable). Standalone (unconsolidated) financial statements should be used, except for Tax Groups.

Key Points to Remember:

1. Cash Basis of Accounting: If you use this method, only the Income Statement is required.
2. Unincorporated Partnerships: Include your share of the gross income and expenditure in the Income Statement.
3. Tax Groups: Complete the schedule based on consolidated financial statements, excluding entities that are not members of the Tax Group.
4. Currency: All amounts must be reported in AED to the nearest dirham.

Pro Tip: If certain fields are not relevant, enter '0' instead of leaving them blank.

Audit Requirements

An independent external audit is mandatory for entities with revenue exceeding AED 50 million or all Qualifying Free Zone Persons, regardless of revenue levels. Audits must be conducted by UAE-registered auditors in line with Federal Law No. 41 of 2023.

Key fields to complete:

• Audit Opinion: Indicate whether the audit opinion was qualified or unqualified.
• Auditor’s Name: Provide the name of the auditor who conducted the audit.

Accounting Adjustments and Exempt Income

This section involves adjusting your accounting income to arrive at taxable income, as required by the Corporate Tax Law.

1. Accounting Income

Enter the net profit (positive value) or net loss (negative value) for the tax period:

• Juridical Persons: Enter the accounting net profit/loss as per the financial statements.
• Qualifying Free Zone Persons: Split accounting income into qualifying income (0% tax rate) and other income (9% tax rate) before reporting.
• Tax Groups: Report aggregated financial results, eliminating inter-group transactions.
  

2. Equity Method of Accounting

Adjustments are required for investments recorded under the equity method:

• Exclude unrealized gains/losses recorded in the income statement.
• Include only dividends declared as part of taxable income.

3. Unrealized Gains/Losses

Adjust for any unrealized gains or losses not recognized in the income statement. If you have elected to apply the realization basis, gains and losses will only be subject to tax upon realization (e.g., asset disposal).

4. Transitional Rules Adjustments

Exclude gains or losses related to assets and liabilities owned before the first tax period if you made relevant elections under transitional rules.

5. Exempt Income

Dividends and profit distributions from UAE Resident Persons are exempt from corporate tax. Additionally, income from Participating Interests that meet specific criteria can be excluded.

Key Takeaways

• Accurate Disclosure: Ensure that all parts of the Accounting Schedule are correctly completed.
• Audit Compliance: Maintain audited financial statements if required by law.
• Understand Adjustments: Properly adjust for exempt income, unrealized gains/losses, and investments under the equity method.
• Timely Filing: Submit your Tax Return within 9 months after the end of the tax period to avoid penalties.

How Fastlane Consultancy Can Help

Navigating corporate tax compliance in the UAE can be complex. Fastlane Consultancy offers:

• Expert Tax Filing Support: We ensure your Accounting Schedule and Tax Return are accurately completed.
• Audit Assistance: Guidance on meeting audit requirements and selecting qualified auditors.
• Tailored Tax Solutions: From exempt income to transitional rules, we provide customized advice.
• End-to-End Compliance: Stay ahead with our year-round corporate tax services.

Ready to simplify your corporate tax filing? Enquire Now for expert assistance!