Non-Deductible Expenses and Capped Expenditures: Capped expenditures are specific expenses that have a maximum limit on how much can be deducted in tax calculations.

To ensure accurate reporting, consider the following adjustments:

• Adjustments as per Ministerial Decision 134: According to the General Rules for Determining Taxable Income in the UAE, it is important to streamline the calculation of taxable income by addressing realized and unrealized gains or losses shown in financial statements. Businesses that utilize the accrual basis of accounting can opt to recognize gains and losses on a realization basis for certain assets and liabilities; however, this choice is permanent. The regulations also provide guidance on adjusting the values of assets and liabilities during transfers involving related parties, qualifying groups, or business restructurings.
• Group Relief and Restructuring Adjustments: Companies within the same corporate group can transfer tax losses to reduce their overall tax liability. It is important to ensure that the tax implications of corporate actions, such as mergers or acquisitions, are allocated fairly among the involved entities.

 Tax Credits

You can claim tax credits if you have already paid taxes on the same income, whether in UAE or abroad. These credits help reduce your corporate tax liability.

• Net Income by Jurisdiction: Corporate Tax is applied to net income, which is calculated by deducting economically linked expenses from the relevant income.
• Calculating Tax Credits: The Foreign Tax Credit is limited to the lesser of the actual tax paid on foreign income or the corporate tax due on that foreign income in UAE.
• Adjustments for Timing Mismatches: Be mindful of possible differences in tax periods between the UAE and other countries. Taxes may vary based on timing or the accounting method used, such as cash basis versus accrual basis.