Article 20 of the Federal Decree-Law No. 47 of 2022, prescribes the general rules for determining Taxable Income for the purpose of UAE Corporate Tax wherein Taxable Income shall be determined in accordance with the accounting standards accepted in the UAE.

Other methods or standards of accounting to determine Taxable Income may be prescribed by the Minister.Accordingly, this Ministerial Decision No. 114 of 2023 has been issued. Key decisions are as follows:

1. Generally, accounting standards applicable shall be the International Financial Reporting Standards (“IFRS”).Taxable Persons deriving revenue of AED 50 Mn or lesser can apply IFRS for small and medium-sized entities (“IFRS for SMEs”).

2. Taxable Person having Revenue of AED 3 Mn or less may prepare Financial Statements using cash basis of accounting i.e., recognizing income and expenditure when cash payments are received and paid, respectively.Other Taxable Persons who wish to apply cash basis of accounting, may apply to the FTA in exceptional circumstances.

3. For a Tax Group, consolidated Financial Statements (“FS”) shall mean aggregate standalone FS of the Parent company and each Subsidiary that is a member of such Tax Group.

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