Determination of Taxable Income

The Federal Tax Authority recently released a Corporate Tax Guide on Determination of Taxable Income, This guide is designed to provide general guidance to Taxable Persons for determining their Taxable Income and calculating their Corporate Tax Payable under the Corporate Tax Law. It provides readers with an overview of:

-??????? The adjustments required to be made to the Accounting Income for determining the Taxable Income under the Corporate Tax Law.

-??????? The adjustments required to be made to the Taxable Income for calculating the Corporate Tax Payable under the Corporate Tax Law.

Essential Insights:

·??????? Determination of Taxable Income and calculation of Corporate Tax Payable

-??????? This section provides a broad overview of the most common concepts under the Corporate Tax Law which are relevant for determination of Taxable Income and calculation of Corporate Tax Payable

·??????? This CT guide offers a comprehensive analysis of nine case studies, covering the following topics:

1-???? ?Deductible and non-deductible expenditure

This case study covers the adjustments to be made to Accounting Income relating to deductible and non-deductible expenditure (excluding Interest deduction limitation rules).

2-???? Interest expenditure

This case study covers the adjustments to be made to Accounting Income relating to Interest expenditure. It covers the applicability of the General and Specific Interest Deduction Limitation Rules (i.e. deductible and non-deductible Interest expenditure and the treatment of disallowed/unutilized Net Interest Expenditure).

3-???? Tax Loss Relief

This case study covers the adjustments to be made to Accounting Income relating to Tax Loss relief and the treatment of unutilized Tax Losses.

4-???? Interest expenditure and Tax Loss Relief

This case study covers the adjustments to be made to Accounting Income in a situation where there is both unutilized/carried forward Net Interest Expenditure and Tax Losses.

5-???? Transfer of Tax Loss and limitation on Tax Loss carried forward

This case study covers the application of provisions relating to the transfer of a Tax Loss and the limitation on the use of Tax Loss carried forward.

6-???? Cash Basis of Accounting

This case study covers the determination of Taxable Income and calculation of Corporate Tax Payable in the case of a Taxable Person having Revenue equal to or less than AED 3 million and applying the Cash Basis of Accounting.

7-???? ?Unrealized gains and losses, Exempt Income

This case study covers the adjustments to be made to Accounting Income for unrealised gains or losses, and for Exempt Income (such as Dividends, income from Participating Interests) including expenditure incurred in earning Exempt Income.

8-???? Foreign Permanent Establishment

This case study covers the adjustments to be made to Taxable Income in relation to the Foreign Permanent Establishment exemption.

9-???? Non-Resident Person conducting Business in the UAE through a Permanent Establishment

This case study covers the determination of Taxable Income and calculation of Corporate Tax Payable in the case of a Non-Resident Person operating in the UAE through a Permanent Establishment.

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