If your UAE company prepares financial statements under IFRS Accounting Standards, a major change is approaching. IFRS 18, Presentation and Disclosure in Financial Statements, replaces IAS 1 and introduces new requirements for how companies present and explain their financial performance.
The standard becomes effective for annual reporting periods beginning on or after 1 January 2027. Businesses should start preparing earlier because they will generally need to restate comparative figures for the previous year. www.ifrs.org
What is IFRS 18?
IFRS 18 is a financial reporting standard issued by the International Accounting Standards Board (IASB). It aims to make financial statements more consistent, transparent and easier to compare across businesses.
The most visible changes affect the statement of profit or loss, where companies will need to present income and expenses in a more structured way. IFRS 18 also introduces disclosure requirements for certain performance measures used by management and provides more guidance on how financial information should be grouped or separated. www.ifrs.org
For business owners, finance teams and investors, the goal is clearer reporting and a better understanding of where profits come from and how management assesses performance.
When does IFRS 18 take effect?
IFRS 18 applies to annual reporting periods beginning on or after 1 January 2027. Early adoption is permitted.
For a company with a 31 December year-end, the first mandatory annual financial statements under IFRS 18 will generally be for the year ending 31 December 2027. Those statements will normally include restated comparative information for 2026. The new requirements also apply to interim financial statements in the first year of application. www.ifrs.org
This makes 2026 an important preparation year. Companies need to consider how they will produce comparable information for the preceding year, even if their first mandatory annual report will be published later.
Which UAE businesses are affected?
IFRS 18 applies to UAE businesses that prepare financial statements in accordance with full IFRS Accounting Standards. These can include commercial companies, listed entities and financial institutions.
Businesses should check which accounting framework applies to them. The IFRS for SMEs Accounting Standard is a separate standard, so a company using it should not assume that IFRS 18 applies directly. Regulatory requirements and eligibility to use a particular framework should be confirmed with the company’s accountant or auditor. www.ifrs.org
What are the main changes?
1. A more structured profit and loss statement
IFRS 18 introduces categories for income and expenses, including operating, investing and financing. It also requires defined subtotals, including operating profit or loss and profit or loss before financing and income taxes, subject to the standard’s requirements for particular business activities. www.ifrs.org
For many trading and service businesses, this will mean reviewing where items such as interest income, investment returns and finance costs appear in the profit and loss statement.
Classification may differ for businesses whose main activities include investing in assets or providing finance to customers. For example, a bank will need to assess its activities under the specific requirements of the standard rather than simply follow the presentation used by a trading company. www.ifrs.org
2. More transparency around management performance measures
Many businesses use additional measures to explain their performance, such as an adjusted profit figure. Under IFRS 18, certain management-defined performance measures must be disclosed in the notes to the financial statements.
The requirement applies to measures that meet the standard’s definition, including certain subtotals of income and expenses used in public communications to communicate management’s view of the performance of the entity as a whole. Companies will need to explain qualifying measures and reconcile them to the relevant IFRS-defined subtotal. www.ifrs.org
3. Clearer grouping of financial information
IFRS 18 also strengthens the principles for aggregation and disaggregation—deciding which items can be grouped together and which need to be shown separately.
This may require businesses to review broad labels such as “other expenses” and assess whether users of the financial statements need more detail. The aim is to make important information easier to find without overwhelming readers with unnecessary detail. www.ifrs.org
Does IFRS 18 change a company’s profit or tax liability?
IFRS 18 primarily changes presentation and disclosure. It does not, by itself, change the recognition and measurement requirements that determine how most transactions are recorded.
However, the way performance is presented—and the operating profit subtotal reported—may look different. Businesses should also consider whether changes in reported subtotals affect loan agreements, performance targets or other arrangements that refer to financial statement measures.
IFRS 18 should not be assumed to create a new UAE corporate tax liability simply because the presentation of the financial statements changes. Companies should review their circumstances with their tax adviser.
How can UAE businesses prepare?
Finance teams can take practical steps now:
- Confirm the applicable reporting framework. Establish whether the business prepares accounts under full IFRS Accounting Standards or another permitted framework.
- Review the current profit and loss statement. Identify income and expenses that may need to be reclassified under IFRS 18.
- Assess comparative information. Determine what data will be needed to restate the previous year’s figures.
- Review public performance measures. Identify adjusted profit figures and other measures used in public communications, and assess whether they require disclosure.
- Check accounting systems and reporting processes. Make sure the chart of accounts, reporting mappings and supporting data can produce the necessary information.
- Discuss the transition with your auditor. Agree on the company’s interpretation, implementation timetable and disclosure approach early.
How Dreambooks supports IFRS 18
Dreambooks fully supports IFRS 18, helping UAE businesses prepare financial reports in line with the new presentation and disclosure requirements.
With Dreambooks, finance teams can structure and present financial information more clearly, making it easier to prepare for the transition to IFRS 18 and produce consistent reports for management, auditors and other stakeholders.
The takeaway for UAE companies
IFRS 18 is an opportunity to make financial reporting clearer and more useful, but it also requires planning. For businesses with a December year-end, the need for 2026 comparative information makes preparation timely.
The best first step is to understand how your existing accounts and reporting systems map to the new presentation requirements—then work with your accountant or auditor on a transition plan.