2025 Financial Statements Closing: Key IAS 12 Deferred Tax Impacts in UAE
UAE Corporate Tax has changed year end closing under IFRS. For many businesses, 2025 is the first closing cycle where deferred tax under IAS 12 becomes a visible driver of profit after tax, balance sheet strength and audit outcomes.
Deferred tax is not the cash tax paid today. It reflects the future tax impact of temporary differences between the IFRS carrying amount of assets and liabilities and their tax base under UAE Corporate Tax rules. Getting this right at 2025 closing improves audit readiness and helps management explain tax movements to stakeholders.
Why 2025 Closing Matters
- You now have a full year of taxable results to support assumptions and forecasts
- Temporary differences start reversing, not just being identified
- Free Zone qualifying income positions are challenged and need documentation
- Your tax note and effective tax rate reconciliation become a key focus area in audits
Deferred Tax Impact Table for 2025 Closing under UAE Corporate Tax (IAS 12 Focus)
The table below summarises common areas that trigger deferred tax at 2025 year end. Actual outcomes depend on your facts, elections and tax positions.
| Area | Accounting Treatment (IFRS) | UAE Corporate Tax Treatment | Deferred Tax Impact at 2025 Close |
|---|---|---|---|
| Property Plant and Equipment | Straight line depreciation | Accelerated or different tax depreciation | Deferred Tax Liability arises or increases |
| Intangible Assets and Software | Capitalised and amortised | Different amortisation or disallowed costs | Deferred Tax Liability |
| Provisions (Leave Bonus Warranty) | Recognised when obligation arises | Deductible only on payment | Deferred Tax Asset subject to probability |
| Accrued Expenses | Recognised on accrual basis | Deductible on payment basis | Deferred Tax Asset |
| Tax Losses | Recognised in profit or loss | Carried forward subject to conditions | Deferred Tax Asset only if future profits probable |
| IFRS 15 Contract Liabilities | Revenue deferred | Taxed when invoiced or received | Deferred Tax Asset or Liability |
| Leases (ROU Asset and Lease Liability) | Recognised on balance sheet | Different tax treatment | Net Deferred Tax Liability common |
| Free Zone Qualifying Income | May be assumed 0 percent | Subject to qualifying criteria | Remeasurement risk at 2025 close |
| Impairment Losses | Recognised immediately | Often not deductible until realised | Deferred Tax Asset subject to recoverability |
| Fair Value Adjustments | Recognised in OCI or profit or loss | Taxed on realisation | Deferred Tax recognised in the same component |
Practical point for 2025 closing: deferred tax assets need support. Forecasts, pipeline evidence and board approved budgets are usually required to justify recognition.
How Univia Can Help
Univia Global Consultancy supports UAE Mainland and Free Zone businesses with audit ready deferred tax solutions aligned with IAS 12 and UAE Corporate Tax requirements.
- Deferred tax register and roll forward model for 2025 year end closing
- Tax base schedules for fixed assets and key balance sheet lines
- Tax loss and deferred tax asset recognition assessment with documented support
- Free Zone qualifying income review including risk mapping and rate assumptions
- Year end disclosures drafting and audit support packs
Management Training and Adoption Support
Univia also provides practical training sessions for management teams and finance teams to adopt UAE Corporate Tax into decision making. These trainings help leadership understand deferred tax movements, interpret tax sensitive financial statements and embed tax impacts into budgeting, pricing and performance reviews.
If you are approaching 2025 closing, early mapping of temporary differences and documented positions reduces late adjustments and strengthens audit discussions.
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