Accounting Profit vs Taxable Profit
Key Differences
| Item | Accounting Treatment | Tax Treatment | |---|---|---| | Fines & penalties | Expense | Non-deductible (added back) | | Entertainment (50%) | Full expense | 50% non-deductible | | Donations | Expense | Deductible only to qualifying entities | | Exempt income | Revenue | Excluded from taxable income | | Tax losses | Not reflected | Offset against taxable income | | Depreciation | Per IFRS | Capital allowances (if different) |
Why It Matters
Understanding these differences ensures accurate tax computation and avoids underpayment or overpayment of tax.
Documentation
All adjustments must be documented and supported. The FTA may request a reconciliation between accounting profit and taxable income during an audit.