IFRS 18 in the UAE: What Businesses Need to Know Before 2027

IFRS 18 Presentation and Disclosure in Financial Statements is the biggest change to the face of the income statement in more than twenty years. It replaces IAS 1 for annual reporting periods beginning on or after 1 January 2027, and it applies to every business that reports under full IFRS, which includes most UAE companies.

It does not change how much profit you make. It changes how you present it, and that has knock-on effects for your chart of accounts, your reporting packs and, in the UAE, the financial statements your Corporate Tax return is built on.

Why it matters now, not in 2027

IFRS 18 applies retrospectively. Your first IFRS 18 financial statements, for the year ending 31 December 2027, must show 2026 comparatives in the new format. In practice, that means the year you are in now needs to be mapped to IFRS 18 as well.

In the first year you must also show a reconciliation for each line item of the income statement, from the IAS 1 presentation to the IFRS 18 one. Early adoption is allowed.

What changes

1. Five categories in the income statement

Every item of income and expense is classified into one of five categories:

• Operating: the default category, for everything not classified elsewhere
• Investing: returns from investments such as associates, joint ventures, and cash and cash equivalents in most cases
• Financing: interest and other costs on liabilities that raise finance, such as loans, and interest on items like lease liabilities
• Income taxes
• Discontinued operations

For most businesses, the main judgement is what moves out of "operating". Banks, insurers and investment entities, whose main business is investing or providing finance, follow special rules.

2. Two new required subtotals

• Operating profit or loss
• Profit or loss before financing and income taxes

Today, "operating profit" means different things in different companies. Under IFRS 18 it has a single definition, which makes companies easier to compare.

3. Management-defined performance measures

If you use measures such as adjusted EBITDA or "underlying profit" in public communications, such as investor presentations or annual reports, and they are subtotals of income and expenses, IFRS 18 calls them management-defined performance measures. They must be disclosed in a single note, with a reconciliation to the nearest IFRS subtotal and the tax and non-controlling interest effect of each reconciling item.

4. Better grouping of information

New principles on aggregation and disaggregation mean fewer large "other" lines. Material items must be shown separately, and companies that present expenses by function (such as cost of sales and administrative expenses) must disclose certain expenses by nature, including depreciation, amortisation and employee benefits, in the notes.

The UAE angle

• Corporate Tax starts from your financial statements. Under Ministerial Decision No. 114 of 2023, taxable income is based on financial statements prepared under IFRS. IFRS 18 does not change net profit, so it should not change your taxable income, but the line items you map into the Corporate Tax return may move. Check your tax workpapers still tie to the new presentation.
• IFRS for SMEs is different. Businesses with revenue up to AED 50 million may use IFRS for SMEs for Corporate Tax purposes. IFRS 18 does not apply to IFRS for SMEs, so if you use that standard, this change does not directly affect you.
• Audited accounts. Businesses with revenue above AED 50 million, and all Qualifying Free Zone Persons, must prepare audited financial statements. Talk to your auditor now about how they will review your IFRS 18 mapping and the 2026 comparatives.
• Banking covenants. Loan agreements that refer to "operating profit" or EBITDA may need to be reviewed, since the figures in your accounts may change.

What to do before 2027

1. Map your chart of accounts to the five categories. Items such as foreign exchange differences may need to be split between categories, depending on what they relate to.
2. Restate 2026 in the IFRS 18 format alongside your normal close, so comparatives are ready.
3. List your performance measures used outside the financial statements, and prepare the reconciliations.
4. Review "other" lines and decide which items need to be shown separately.
5. Update reporting packs and dashboards so management sees the same subtotals as the financial statements.
6. Agree the approach with your auditor and, if relevant, your lenders.

How Dreambooks helps

Dreambooks has an IFRS 18 report built in: each account is mapped to its IFRS 18 category, and the income statement shows operating profit and profit before financing and income taxes alongside the IAS 1 view. You can run 2026 in both formats today, so the comparatives and the first-year reconciliation are ready when you need them.

Official sources

• IFRS Foundation: IFRS 18 Presentation and Disclosure in Financial Statements
• Ministerial Decision No. 114 of 2023 on Accounting Standards and Methods for Corporate Tax purposes
• FTA: Accounting Standards guide for Corporate Tax

This article is general information as of October 2026, not accounting or tax advice. Check IFRS 18 and the latest FTA guidance, or speak to your auditor or tax adviser, before acting.