In a significant development, the UAE Federal Tax Authority (FTA) unveiled a Corporate Tax Guide on November 6, 2023, addressing the intricate relationship between Accounting Standards and Corporate Tax (CT).

• Accepted accounting and reporting standards, such as International Financial Reporting Standards (IFRS), and IFRS for small and medium-sized enterprises (if specific requirements are met).
• The foundation for preparing financial statements within a Tax Group.
• Comparison of accounting methods (accrual basis vs. cash basis).
• Key adjustments to accounting profit or loss for determining taxable income.
• The calculation of the tax basis of assets and liabilities based on transitional rules.

Furthermore, the guide includes illustrative examples covering:

• Adjustments resulting from applying the realization basis for Corporate Tax (CT) purposes and tax depreciation.
• Adjustments under transitional rules.
• Adjustments related to transactions among affiliated parties and transfers within a Qualifying Group.
• Adjustments arising from gains or losses reported in the statement of other comprehensive income.
• Adjustments to replace the impact of the equity method of accounting (if applied) with the effect of the cost method of accounting for CT.

These examples serve to enhance clarity on historically ambiguous interpretation issues.