Key takeaways
- UAE corporate tax is calculated from financial statements prepared under IFRS, or under IFRS for SMEs if the company's revenue for the tax period is AED 50 million or less (Ministerial Decision No. 114 of 2023, as of 1 November 2026).
- A UAE company or business with revenue of AED 3 million or less in a tax period may prepare its corporate tax financial statements on a cash basis; above that level, the company must move to accrual accounting unless the FTA approves exceptional circumstances.
- No other accounting framework is accepted for calculating UAE corporate tax; a company can keep books under another standard for other purposes only if its corporate tax figures are still produced under IFRS or IFRS for SMEs.
- A UAE company with revenue above AED 50 million in a tax period starting on or after 1 January 2025 must also have audited financial statements, as must every Qualifying Free Zone Person (Ministerial Decision No. 84 of 2025).
- The IFRS for SMEs threshold is tested on the revenue of the tax period itself, so a UAE company only knows for certain whether it qualified after that period has ended.
Which accounting standard must I use for UAE corporate tax?
You must use IFRS unless you qualify for IFRS for SMEs. Article 20(1) of Federal Decree-Law No. 47 of 2022 says taxable income is based on standalone financial statements prepared under accounting standards accepted in the UAE, and Ministerial Decision No. 114 of 2023 names those standards as IFRS and IFRS for SMEs only.
| Your situation in a tax period | Standard for corporate tax | Source |
|---|---|---|
| Revenue above AED 50 million | IFRS (full) | Ministerial Decision No. 114 of 2023, Art. 4 |
| Revenue of AED 50 million or less | IFRS, or IFRS for SMEs if you choose | Ministerial Decision No. 114 of 2023, Art. 4(2) |
| Revenue of AED 3 million or less | Cash basis is also allowed, without applying to the FTA | Ministerial Decision No. 114 of 2023, Art. 2 |
| Tax group | Consolidated statements under IFRS or IFRS for SMEs | Federal Decree-Law No. 47 of 2022, Art. 42 |
The FTA's Accounting Standards guide (6 November 2023) confirms that IFRS for SMEs is an option, not the default: where the revenue condition isn't met, IFRS applies.
When can I use IFRS for SMEs instead of full IFRS?
You can use IFRS for SMEs when your revenue for the tax period doesn't exceed AED 50 million. The FTA treats revenue as the gross amount of income from all of your business activities, measured on an arm's length basis, not profit and not just the income from your main activity.
Say a SHAMS trading company invoices AED 12 million a year across its goods and services lines. Its revenue is well under the line, so it could prepare its corporate tax statements under IFRS for SMEs. If the same company expected to reach AED 55 million in the coming year, it would be safer to build its books on IFRS from the start, because the line is tested on the period's revenue (more on that below).
IFRS for SMEs is shorter and has simpler recognition rules than full IFRS, so it suits many smaller companies. The counter-case: if you're preparing for an investor, a lender or a sale, a buyer's advisers may expect full IFRS, so the cheaper framework isn't always the cheaper choice.
Can I use cash basis accounting for UAE corporate tax?
Yes, but only if your revenue is AED 3 million or less in the tax period, or the FTA accepts that exceptional circumstances apply. Below AED 3 million you don't need to apply to the FTA; above it, you should move to accrual accounting.
| Item | Rule | Source |
|---|---|---|
| Revenue limit for cash basis | AED 3 million or less in the tax period | Ministerial Decision No. 114 of 2023, Art. 2 |
| Application to the FTA | Not needed below the limit; needed for exceptional circumstances | FTA Accounting Standards guide, s.4.2 |
| How revenue is measured for this test | On a cash basis (cash received) | FTA Accounting Standards guide, s.4.2.4 |
| Example of exceptional circumstances | Expecting to exceed the limit in one tax period only; keep evidence | FTA Accounting Standards guide, s.4.2.3 |
| What you prepare instead of full statements | An income and expenditure statement | FTA Determination of Taxable Income guide, s.3.1 |
Cash basis is a compliance shortcut, not a business-health tool. If you have unpaid supplier invoices, stock or deferred revenue, cash-basis accounts will give you a misleading picture of profit even where the tax rule allows them.
Do I need audited financial statements as well?
Audited statements are a separate rule from the choice of standard, and they apply in two cases: revenue above AED 50 million, and every Qualifying Free Zone Person. Ministerial Decision No. 84 of 2025 sets this for tax periods starting on or after 1 January 2025 and repealed Ministerial Decision No. 82 of 2023, which still governs earlier periods.
| Who | Audit requirement | Source |
|---|---|---|
| Taxable person (not in a tax group) with revenue above AED 50 million | Audited financial statements | Ministerial Decision No. 84 of 2025, Art. 2(1)(a) |
| Qualifying Free Zone Person | Audited financial statements | Ministerial Decision No. 84 of 2025, Art. 2(1)(b) |
| Tax group | Audited special purpose financial statements, in the form the FTA sets | Ministerial Decision No. 84 of 2025, Art. 2(2) |
| Non-resident person | Only revenue from permanent establishments or UAE nexuses counts towards AED 50 million | Ministerial Decision No. 84 of 2025, Art. 2(4) |
Article 54 of the Corporate Tax Law doesn't require audits itself; it lets the Minister of Finance name the categories of taxable person that must prepare audited or certified statements, and that is what the decisions above do. Free zone audit rules for licence renewal are separate and set by each free zone authority, so check yours.
If you'd rather not track these dates by hand, the UAE compliance calendar lists the audit, filing and renewal dates for your company.
What happens if I use a different accounting standard?
Using any standard other than IFRS or IFRS for SMEs to calculate corporate tax is a breach of the Corporate Tax Law and can lead to administrative penalties. The FTA's guide cites Article 24(1)(a) of the Tax Procedures Law for this.
You can still keep management accounts or statutory books under another framework for non-tax purposes. The condition is that the corporate tax calculations and reporting are done under IFRS or IFRS for SMEs, which in practice means a reconciliation between the two sets of figures. Exempt persons may use other standards, but a government entity or extractive business must use IFRS or IFRS for SMEs for any separately taxable activity.
Records matter as much as the standard: Article 56 of the Corporate Tax Law requires a taxable person to keep its records and documents for seven years following the end of the tax period.
AED 50,000,000: revenue limit in a tax period above which a UAE taxable person must use full IFRS and, separately, must prepare audited financial statements. Source: Ministerial Decision No. 114 of 2023, Art. 4(2), and Ministerial Decision No. 84 of 2025, Art. 2(1)(a), checked 1 November 2026.
What most guides don't tell you
- The line is tested after the year ends. The FTA guide says whether revenue exceeded AED 50 million or AED 3 million is known with certainty only once the tax period is over. A company that picks IFRS for SMEs or cash basis at the start of the year and then has a strong second half can find it chose the wrong framework. If you're near either line, plan on your forecast, not last year's number.
- The cash-basis test uses cash received. The FTA guide says revenue for the AED 3 million cash-basis test is measured on a cash basis, even for companies using Small Business Relief. Small Business Relief now covers tax periods ending on or before 31 December 2029 (Ministerial Decision No. 131 of 2026, issued 29 July 2026), but the relief is a separate election from the accounting method, so check both.
- The realisation election can't be undone. A company on accrual accounting can elect to take gains and losses into account on a realisation basis (Article 20(3) of the Corporate Tax Law). Under Ministerial Decision No. 134 of 2023, the election is made in the first tax period and is irrevocable unless the FTA approves otherwise, so decide it deliberately rather than by default.
Which deadlines apply to your company?
Your standard, your revenue and your free zone status decide which statements, audits and returns fall due, and when. Qawi's free UAE compliance calendar is a free calendar of your company's UAE tax and compliance deadlines, personalised from a few questions, as a PDF and calendar file.
Frequently asked questions
Do I need audited financial statements for corporate tax?
Only if your revenue exceeds AED 50 million in the tax period or you are a Qualifying Free Zone Person (Ministerial Decision No. 84 of 2025, for tax periods starting on or after 1 January 2025). Otherwise the law doesn't require an audit for corporate tax, though a bank, investor or free zone authority may ask for one.
Which companies need audited accounts for corporate tax purposes?
Taxable persons with revenue above AED 50 million, Qualifying Free Zone Persons, and tax groups (which prepare audited special purpose financial statements). Non-resident persons count only revenue from permanent establishments or UAE nexuses towards the AED 50 million line.
Can I use cash basis accounting for corporate tax?
Yes, if your revenue is AED 3 million or less in the tax period, with no FTA application needed. Above that level you need accrual accounting unless the FTA accepts that exceptional circumstances apply.
What records do I need to keep for corporate tax and for how long?
Article 56 of the Corporate Tax Law requires you to keep all records and documents for seven years following the end of the tax period. In practice this covers the financial statements and the supporting records behind them.
About Qawi
About Qawi · Qawi is a corporate services firm licensed in the Sharjah Media City (SHAMS) free zone, handling company formation, visas and PRO, bookkeeping, VAT and corporate tax for UAE businesses. Guides are researched from FTA, Ministry of Finance and free zone sources. Qawi on LinkedIn
Sources
- Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, as amended (Ministry of Finance)
- FTA Corporate Tax Guide: Accounting Standards and Interaction with Corporate Tax (6 November 2023)
- FTA Corporate Tax Guide: Determination of Taxable Income (31 July 2024)
- Ministerial Decision No. 84 of 2025 on Audited Financial Statements (Ministry of Finance)
- Ministerial Decision No. 131 of 2026 amending Ministerial Decision No. 73 of 2023 on Small Business Relief (Ministry of Finance)
- Ministry of Finance announcement: Small Business Relief extended until 31 December 2029
Last checked: 01 November 2026
This is general information, not tax or legal advice for your specific situation.