Lesson 10 — The book-to-tax bridge, line by line
The report is a ladder. Each line is numbered so you can refer to it in a conversation, and each carries a magnifier icon that drills through to its journal items.
| Line | Description | Demo (AED) |
|---|---|---|
| 10 | Accounting income (net profit before tax) | −99,445.00 |
| 20 | Unrealized gains/losses adjustment | 0.00 |
| 21 | Book-vs-tax depreciation timing difference | 0.00 |
| 30 | Add: Non-deductible — entertainment (50%) | 0.00 |
| 31 | Add: Non-deductible — fines & penalties | 0.00 |
| 32 | Add: Non-deductible — non-qualifying donations | 0.00 |
| 33 | Add: Non-deductible — other | 0.00 |
| 40 | Add: Interest disallowed (GIDL) | 0.00 |
| 50 | Less: Exempt — dividends (domestic) | 0.00 |
| 51 | Less: Exempt — participation exemption | 0.00 |
| 52 | Less: Exempt — foreign PE | 0.00 |
| 60 | Less: Other deductions / reliefs | 0.00 |
| 70 | Taxable income before loss relief | −99,445.00 |
| 80 | Less: Tax-loss relief (capped) | 0.00 |
| 90 | Taxable income | −99,445.00 |
| 100 | Tax on first band @ 0% | 0.00 |
| 110 | Tax on excess @ headline rate (9%) | 0.00 |
| 120 | CT before credits | 0.00 |
| 130 | Less: Foreign tax credit | 0.00 |
| 140 | Corporate Tax payable | 0.00 |
How to read it in four moves.
Lines 10–21 — where you start. Accounting income is your net profit before tax, straight from the ledger. Lines 20 and 21 restate the two areas where accounting and tax most often disagree about timing.
Lines 30–40 — what you add back. Expenses the law does not let you deduct. Entertainment is labelled "(50%)" after the CT Law's 50% restriction on entertainment expenditure (Art. 32); fines and penalties are never deductible; GIDL is the general interest deduction limitation.
Lines 50–60 — what you take out. Income the law exempts: domestic dividends, participation exemption, foreign permanent establishment income.
Lines 70–140 — the computation. Line 70 is taxable income before loss relief. Line 80 applies brought-forward losses, and it says "capped" for a reason: the CT Law limits loss relief to 75% of taxable income before relief, so losses can reduce a tax bill substantially but not usually to nothing. Lines 100 and 110 apply the two bands — 0% up to AED 375,000, then the headline rate on the excess. Line 130 relieves foreign tax already paid. Line 140 is the answer. Source: CT Law Arts. 37(2), 3(1); Cabinet Decision 116/2022.
One thing this ladder does not show. The demo company has not elected Small Business Relief, so the bridge above is the ordinary path. Where SBR is elected the computation short-circuits and the report reflects that instead — course 2.2 covers it.
Where the add-backs come from. You maintain them under Configuration → CT Adjustments. They are your judgements about your own accounts, recorded once and applied to the computation, so the bridge is auditable rather than reconstructed in a spreadsheet each year.
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