Can I choose my Corporate Tax period?

• • • the Tax Period is not extended to last more than 18 months or not reduced to last less than 6 months,47 where the Taxable Person filed an application to shorten a Tax Period, the application is not in respect of a prior or current Tax Period,48 the application is made before the lapse of 6 months from the end of the original Tax Period.49 Further, the Financial Year condition requires that the Financial Year of all members of the Qualifying Group must end on the same date. 50 This does not necessarily require all members of a Qualifying Group to have the same Financial Year or Tax Period. For example, if a Taxable Person has a longer or shorter Financial Year as compared to other members of the Qualifying Group, the Financial Year condition is met so long as the longer or shorter Financial Year ends on the same date as other members. 4.6. Accounting Standards condition All members of a Qualifying Group must prepare their Financial Statements using the same Accounting Standards.51 For the purposes of the UAE Corporate Tax Law, a Taxable Person is required to prepare Financial Statements based on IFRS.52 Where the Revenue of the Taxable Person does not exceed AED 50 million, they may choose to apply IFRS for SMEs instead.53 The condition would not be met if one Taxable Person uses IFRS and another Taxable Person uses IFRS for SMEs. It is possible that a Taxable Person meets all the conditions to be a member of a Qualifying Group except the Accounting Standards condition because it prepares its Financial Statements under IFRS for SMEs whereas other members apply (full) IFRS. In such a case, the Taxable Person may choose to prepare its Financial Statements under (full) IFRS to align with other members of the Qualifying Group. This does not require any application to be made to the FTA. Further, the Accounting Standards condition is not a requirement to follow the same accounting policies in the standalone Financial Statements. Thus, even if all members of the Qualifying Group use the same Accounting Standards, each member may follow different accounting policies, if those policies are permitted under the relevant Accounting Standards. 47 Article 2(3) of FTA Decision No. 5 of 2023. 48 Article 2(5) of FTA Decision No. 5 of 2023. 49 Article 2(4) of FTA Decision No. 5 of 2023. 50 Article 26(2)(e) of the Corporate Tax Law. 51 Article 26(2)(f) of the Corporate Tax Law. 52 Article 4(1) of Ministerial Decision No. 114 of 2023. 53 Article 4(2) of Ministerial Decision No. 114 of 2023. Corporate Tax Guide | Qualifying Group Relief | CTGQGR1 26

date of their Financial Year to align with each other. This could be done by one or both of them making an application to the FTA, subject to the following conditions:57 • the Taxable Person has not yet filed the Tax Return for the Tax Period it is applying to change,58 • the Tax Period is neither extended to last more than 18 months nor reduced to last less than 6 months,59 • where the Taxable Person filed an application to shorten a Tax Period, the application is not in respect of a prior or current Tax Period,60 and • the application is made before the lapse of 6 months from the end of the original Tax Period.61 The Financial Year condition requires the Financial Year of the Transferor and Transferee to end on the same date.62 This does not necessarily require them to have the same Financial Year/Tax Period. For example, if the Transferor has a longer or shorter Financial Year as compared to the Transferee, the Financial Year condition is met so long as the reorganisation transaction on which Business Restructuring Relief is claimed takes place in a Financial Year that has the same end date of the Financial Year for both parties. 4.5. Accounting Standards condition Business Restructuring Relief requires the Transferor and Transferee to prepare their Financial Statements using the same Accounting Standards.63 For the purposes of the UAE Corporate Tax Law, a Taxable Person is required to prepare Financial Statements based on IFRS.64 Where the Revenue of the Taxable Person does not exceed AED 50 million, they may choose to apply IFRS for SMEs instead. 65 This condition would not be met if one Taxable Person uses IFRS and another Taxable Person uses IFRS for SMEs. It is possible that the Transferor and Transferee meet all the conditions for Business Restructuring Relief except the Accounting Standards condition because one Taxable Person prepares its Financial Statements under IFRS for SMEs whereas the other applies IFRS. In such a case, the Taxable Person may choose to prepare its Financial 57 Article 58 of the Corporate Tax Law read with Article 2(1)(b) of FTA Decision No. 5 of 2023. 58 Article 2(2) of FTA Decision No. 5 of 2023. 59 Article 2(3) of FTA Decision No. 5 of 2023. 60 Article 2(5) of FTA Decision No. 5 of 2023. 61 Article 2(4) of FTA Decision No. 5 of 2023. 62 Article 27(2)(e) of the Corporate Tax Law. 63 Article 26(2)(f) of the Corporate Tax Law. 64 Article 4(1) of Ministerial Decision No. 114 of 2023. 65 Article 4(2) of Ministerial Decision No. 114 of 2023. Corporate Tax Guide | Business Restructuring Relief | CTGBRR1 29

Article 19 – Election to be Subject to Corporate Tax 1. A Qualifying Free Zone Person can make an election to be subject to Corporate Tax at the rates specified under Clause 1 of Article 3 of this Decree-Law. 2. The election under Clause 1 of this Article shall be effective from either of: a. The commencement of the Tax Period in which the election is made. b. The commencement of the Tax Period following the Tax Period in which the election was made. Chapter Six – Calculating Taxable Income