Navigating the Impact of IFRS policies on your Corporate tax

In a crucial session designed to demystify the intersection of accounting standards and tax obligations, Nexdigm experts recently convened to explore a topic of increasing importance for businesses operating in the UAE. The discussion tackled the complexities arising from the adoption of International Financial Reporting Standards (IFRS) and their subsequent influence on determining corporate tax liabilities.

The presentation provided a detailed analysis of how specific IFRS policies, including IFRS 15 on revenue recognition, impact the calculation of taxable income compared to previous accounting practices. It further examined the implications of different depreciation methods under IFRS and how those choices can affect a company's tax bill. A significant portion of the session was dedicated to dissecting the nuances of IFRS 9 concerning financial instruments, explaining how various classifications of these instruments influence taxable income.

Nexdigm’s speakers also offered practical guidance on the deductibility of provisions under IFRS, emphasizing the crucial adjustments needed to reconcile accounting practices with tax regulations. The session further addressed key adjustments to IFRS books, such as those related to transactions with related parties and the application of the arm's length principle. Transitional rules and the tax implications of realized and unrealized gains and losses were also discussed. The concept of deferred tax, including permanent and temporary differences, was explained with illustrative examples.

Wrapping up the session, the experts provided key tax updates, including insights on the Corporate Tax Return Guide and Transfer Pricing Disclosure Form, along with other recent developments from the Federal Tax Authority. The applicability of IFRS and audit requirements, as well as the impact of foreign exchange fluctuations and interest expenses under IFRS, were also covered.