What to take into your next appraisal
- Build an accounting-to-tax bridge before calculating tax cash payments.
- A free-zone address does not by itself establish zero tax on development income.
- Keep tax-payment dates visible after project completion.
Identify the entity and the activity
The Ministry of Finance explains that corporate tax is imposed on taxable income earned by a taxable person in a tax period. Its overview starts the calculation with accounting income, followed by adjustments for matters such as exempt income and non-deductible expenditure. A project cash surplus is therefore not the tax base.
Map the landowner, developer, service companies and investor entities. Establish which entity earns each revenue and incurs each expense. Ask the tax adviser to confirm registration, grouping, related-party treatment and the tax period used by the appraisal.
Build a bridge that can be reviewed
Start with the accounting profit forecast for the relevant entity. Add back costs assumed non-deductible, remove income with a confirmed different treatment and show other adjustments as separate lines. Record loss utilisation and interest limitations only where the adviser has established the applicable conditions.
Do not calculate tax by applying a headline percentage to sales revenue or equity distributions. The Ministry’s overview also explains that free-zone persons are within scope, with qualifying treatment dependent on conditions and qualifying income. Model an unconfirmed exemption as an unresolved assumption, not as an automatic benefit.
Worked example: a tax provision is not a distribution
For a fictional entity, assume AED 4m accounting profit, AED 0.2m of adviser-confirmed add-backs and AED 0.1m of adviser-confirmed deductions. The resulting illustrative tax base is AED 4.1m. Apply an assumed flat 9% effective rate solely to demonstrate the bridge; this deliberately does not reproduce thresholds, reliefs or a full UAE tax computation.
The illustrative provision is AED 369,000. A project with AED 5m cash before tax cannot distribute all AED 5m merely because the payment date falls after construction completion. Reserve the expected liability and show who funds any later adjustment.
| Illustrative bridge | AED |
|---|---|
| Accounting profit | 4,000,000 |
| Add-backs | 200,000 |
| Deductions | (100,000) |
| Illustrative tax base | 4,100,000 |
| Provision at assumed flat 9% | 369,000 |
Place payment in the correct period
The Ministry overview states a general return deadline within nine months of the end of the relevant tax period, with the same deadline generally applying to payment. Confirm the entity’s actual period and applicable requirements, then place the cash payment in that month.
Keep the tax provision, tax payable and cash paid as separate balances. If a hold scenario continues beyond development completion, extend the tax forecast with the rental activity. A terminal valuation does not automatically settle the entity’s tax obligations.
Record the questions that change the investment case
Use one line per material assumption: entity, tax period, accounting policy, adjustment, source and confirmation status. Include acquisition structure, intercompany funding, disposals and treatment on a change from sell to hold. A revised tax opinion should be traceable to the version of the feasibility that relied on it.
Present pre-tax returns with the supported post-tax scenario, and make unresolved treatment visible. This lets the committee see whether the investment depends on a tax outcome that has not yet been established.
Sources and further reading
- Corporate Tax UAE Ministry of Finance
Published by Feasly. How we prepare our guides. Suggest a correction.
