UAE Ministerial Decision No. 134 of 2023 And Its Key Points

UAE Ministerial Decision No. 134 of 2023 And Its Key Points

The General Rules for Determining Taxable Income in the UAE simplify the calculation process by considering realized and unrealized gains or losses from Financial Statements. Businesses can choose to recognize gains and losses on a realization basis for certain assets and liabilities if they use the Accrual Basis of Accounting. This choice is irrevocable, except for exceptional circumstances approved by the Federal Tax Authority. The rules also provide guidelines for adjusting changes in values on assets and liabilities related to transfers involving Related Parties, qualifying groups, or business restructuring relief. Overall, these rules streamline taxable income calculation for UAE businesses.

The key highlights include:

  1. Adjustments for realized or unrealized gains and losses that are reported in the financial statements but not subsequently recognized in the statement of income.

  2. Replacement of the equity method of accounting with the cost method of accounting, if applicable and allowed under accounting standards.

  3. Adjustments for assets and liabilities when electing to consider gains and losses on a realization basis, including the exclusion of certain changes in asset value or liability value and the inclusion of unrecognized amounts upon realization.

  4. Adjustments for assets and liabilities when electing to consider gains and losses on a realization basis under different circumstances.

  5. Adjustments to the calculation of taxable income in relation to transactions with related parties, including adjustments based on the consideration paid and market value.

  6. Adjustments to the calculation of taxable income in relation to transfers within a qualifying group, excluding certain changes in asset or liability value.

  7. Adjustments to the calculation of taxable income in relation to business restructuring relief, excluding certain changes in asset or liability value.

  8. Adjustments to the calculation of taxable income for partners in unincorporated partnerships, including the exclusion of partnership income or loss and the exclusion of gains or losses on the transfer of partnership interests.

  9. Conditions for electing the use of the realization basis, including options for different types of taxable persons and the irrevocability of the election.

  10. Clarifications on what constitutes the realization of assets or liabilities, including exclusions for transfers within a qualifying group and transfers in business restructuring, and inclusions such as sale, disposal, settlement, and forgiveness of assets or liabilities.

     If you have questions/concerns, contact NR Doshi and Partners at +971 4 352 8001 or enquiries@nrdoshi.ae. We will be happy to assist you.

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