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Consulting invoice example for corporations

[Music] today we're picking up where we left off in our tax Made Easy series and diving into how to calculate corporate tax liabilities starting off with its first topic accounting income reconciliation it's a big topic but we'll break it down so it's easy to follow and most importantly helpful for you if you do have questions kindly write them down on our chat box and I will read it during the Q&A portion after the discussion now it is my pleasure to introduce our speaker for today he is a highly accomplished professional with more than a decade of experience in audit tax finance and business consultancy having worked with multinational companies and government agencies please welcome our co-founder and chairman Mr Chad M bonon over to you sir Chad thanks JY hello good after afternoon everyone thank you so much for joining us with our tax webinar we wanted to make it easier for you guys and our topic for today is more about calculating the tax liability accounting income reconciliation so before we will be going with our uh discussion of the topic so I guess we could try to do some recap of the the discussion that we have from our last um webinar so I'll try to present a polling question for you guys so you will be able to show with me or with with all of us here that you have been able to attend the last webinar that we have conducted okay so we have our first pulling question shop right so at least we'll be trying to do it as an interactive one okay so the first pulling question that we have is uh I believe that you have attended our last webinar so if ever you haven't attended the last webinar I think you have this idea as well so please answer on the pulling question what are the formations of the companies in the uee okay so please answer it's only one question okay all right so we have received some of the answers already okay good so I believe most of you guys have been attending the webinar that we have conducted or even if you haven't attended the webinar I believe you have an idea of what are the com the formations of the companies here in the UAE so we have the free zone entities we have the establishment we have the limited liability companies and we have the PGA uh pjsc and probably you might be having some questions how about for those uh civil companies civil companies are considered establishments as well okay so most of you guys have uh taken the or have answered the correct question or sorry have have the correct answer okay another recap okay let's have another another recup question recup number two okay so what are the two types of taxable person in terms of UA corporate tax let's have a recap what are the two types of taxable person in the uee corporate tax or in terms of uee corporate tax is it judical person and magical person is it a natural person and a legal person is it a jic I person and natural person or is it a legal person and a magical person okay so I believe we have received already some of the answers okay so the answer is yes it is actually uh gical person and natural person okay there is actually five Recaps we have so let's go through with third recap okay okay so next recap number three what is the value of turnover that would require the natural person to register for corporate tax again what is the value of turnover that would require the natur natural person to register for corporate tax please do answer okay is it 10 million is it 375,000 is it 187,00 or is it 1 million okay so the correct answer is not uh okay the correct answer is actually 1 million so this is uh natural person natural person and we are talking about corporate tax so if it is va8 value added tax it would be 375,000 for mandatory and 187,00 for voluntary but since we are talking about corporate tax it is actually 1 million for the natural person meaning for those establishment or any other natural person um or civil companies uh that would be considered as natural person so if they reach a threshold or a a a turnover or a revenue of 1 million then they would be required to register for corporate tax okay so not 10 million 10 million is uh out of the picture so the correct answer is 1 million okay so let's go back to another recap recup number four okay so what are the exact incomes for natural person so this will be one of the discussions that we will be having as part of our uh reconciliation for a natural person okay so what are the exam incomes for natural persons is it wages and other employment income personal investment income and real estate income or real in uh real estate investment income wages and other employment income personal investment income okay so yes the correct answer is all of the above that would be wages and other employment income personal investment income and real estate investment income so these are exempt incomes for natural person so again when we are competing for the 1 million Revenue so if ever we are competing for 1 million Revenue it will be based on the revenues that they have Exempted for this three types of incomes so if it is a real estate investment and uh we have um wages and other employment as well employment income that is excluded and we have the personal investment income that is uh excluded as well in terms of computation of your turnover or your Revenue okay so that are considered as exemp incomes okay so you guys have done it perfectly now another recap number five so for our recap number five let's talk about um judical person so I believe you have also an idea what is the timeline required for the registration for corporate tax so this has been one of the discussions that we have made from our last webinar so if a judical person was established on April 1 2024 the issued license date is on June 15 2024 when when should be the come or when should the company require to register for corporate tax is it July 1 2024 is it August 2024 or is it June 30 2024 or is it September 15 2024 okay please don't answer so this is actually in terms of the timeline for Reg rtion so if ever your company has been established on April 1 2024 after after the um public clarifications and the timeline requirements that has been issued by the FDA to register for corporate tax so when should you register for corporate tax is it uh July 1 2024 is it August 31 2024 or is it September or uh June 30 2024 or September 15 2024 again please take note of the date it is actually on April 1 2024 that they have been able to establish meaning they have been able to be incorporated on April 1 2024 so in that case that's after March 1 2024 so if it is after March 1 2024 uh you have to register for for corporate tax 3 months after your incorporation 3 months after your incorporation so the correct answer is July 1 2024 okay so not September 15 2024 that will be July 1 2024 so 3 months after your incorporation not based on your license date that will be based on your incorporation date for your license date that will be if ever prior to March 1 2024 you will be basing it based on your license if you are Incorporated uh prior to March 1 2024 okay so that's part of our recap hopefully you have uh had some knowledge for our Recaps as well that because it will be required or it will be beneficial for us whenever we are doing the calculate calculation of our um corporate tax liability okay now so what will be the topics that we will be discussing for our um webinar for today so since we are talking about calculating the uh corporate tax liability we will be talking about taxable income so that will be the basis or the tax base that we will be having whenever we will be doing the computation for corporate tax then we have the accounting income so what's the difference between taxable income and accounting income we will be having a discussion with it and then we will be discussing as well what are the EXA incomes for UA corporate taxs and uh I believe uh from our recup earlier we have the EXA incomes for personal Investments or for natural person for personal Investments uh real estate investment and then for um salaries or employee related incomes or employment related incomes then we have the income reconciliation understanding where do the adjustments came from and then we will be having the discussion as well of a Reconciliation of those adjustments that we found out and then having an idea about the calculation of our corporate tax like ability okay so let's start the discussion so normally um normally the calculation of corporate tax liability is based on the taxable gross income or what are the sales the revenues that is actually within the bracket of the corporate tax or within the bracket of taxable gross income so we will be identifying uh there should be a need of identification of which are the incomes that actually part of the taxable gross income so say for example if you're conducting a business then that would be part of our taxable gross income if ever you have an employment that should not be part of the uh taxable uh or taxable gross income and if ever it is personal related for a natural person then that should be added as part of your taxable gross income so technically it's more into your sales of your business and then it will be deducted with acceptable deductible expenses uh provided by the law so whenever we will be having a list of expenses uh then we will be identifying which of these expenses are actually acceptable or not with the um with the tax authorities so normally this is you will be doing the the uh taxable income you identify what is your gross income what is included as part of the taxable gross income or your sales and then you will be needing to deduct the acceptable deductible expenses and then you will be able to get the taxable income so this is generally the um way or the the way of calculation of your taxable income in multi multiple countries in different countries and then you will be uh considering the taxable income as your tax Spas for computation of your tax liability so um the first 375,000 would be at 0% and then in excess of 375,000 that will be 9% and then we will be able to come up or to have our corporate tax liability so this is the normal presentation for most of the countries okay for most of the countes but for UE for uee they made it more simplier they made it uh relatable on what has been the income you have in the books because here the difficult part of this one is actually you will be having a differences with your books of accounts so how are you going to manage those differences would you would you just be picking up which are the uh gross income that would be there so for uee they have come up with a calculation of making it a a two-step approach or a simplier approach in terms of calculation of your corporate tax liability so how how they have been able to do it it's just a twostep approach approach so the first approach is actually determining your accounting income so again as what I have mentioned earlier normally you have your own books of accounts so from your books books of accounts whatever would be the profit that you have generated with it from your books of accounts or what we call as financial statements that will be the basis or the first step that you're going to establish as part of the calculation of your taxable income and then thereafter we will be having to apply the relevant adjustments to that certain income to arrive for our taxable income amount so since you already have the books with you and you have there your accounting income then we need to apply what are the adjustments related to it so it will be become easier for us and it will be determinable of which are those acceptable ones the reason being is here mostly for other countries there are actually itemized deductible expenses there are some cases that those itemized deductible expenses are not are not the same what the accounts that has been used by the other companies so because of that if might be a bit tedious for the um for the taxable person to file for corporate tax because they need to identify okay instead of having the travel and uh allowances they have to transfer it to Transportation expenses and they have to reclassify it so it becomes tedious and then when you do the reconciliation it will be a bit difficult so to make it more simplier okay well get your books how much is your accounting income under your books and how how uh what would be the relevant adjustments that needs to be done with the books or the information that you have provided with us as part of your accounting income okay so this is the two steps in terms of determination of your taxable income now before we go on with our discussion on um the accounting income let's have the trivia or for uh question okay so let's see so which of the following is the starting point of determination of taxable income for UA corporate tax okay so we have um we have a pulling question pleas so which of the following is the starting point of determination of taxable income for UE corporate tax is it revenue is it the expenses is it the accounting income including the other comprehensive income or is it accounting income excluding the other comprehensive income okay so there might be some questions what is other comprehensive income other comprehensive incomes are actually uh reflected as part of the incomes that will be subject for realization so um most of it will be uh related to um let's say uh Dentures it's just like or uh forwards or or any other um or revaluation F so that will be part of the other other other comprehensive income as well so most of this other comprehensive income are actually reflected on the IFR standards of what should be reflected as part of the oci okay so the correct answer is that would be accounting income including including the other comprehensive income so that's the starting point of determination of taxable income for UA corporate tax again showing here so normally this is the normal presentation of other countries as well for most of the countries but for uee they made it more simplier they made it uh as a first determining point would be your accounting income and your accounting income includes UD other comprehensive income so whenever you have the AED financial statements this is what we call as um statement of comprehensive income so you will be able to see from there your profit and loss plus your OC okay so that's the basis or that's the starting point of your um determination of your taxable income Okay so we have 60% who had uh got the correct answer okay so let's go back so again the two steps for a process of determination of your taxable income is based on your first is actually determining that your accounting income second is apply the relevant adjustments to the income to arrive the taxable income amount okay so the new calculation or the correct calculation is we will be starting with accounting income then plus or minus the relevant adjustments and then we will be able to come up with our taxable income and this would be the basis for our tax computation for corporate tax liability again tax on 375,000 that would be 0% zero value and excess of 37 5,000 that will be at 9% okay so question what is accounting income so again accounting income is actually your income in your books of accounts so for those company who those who don't have books of accounts you have to start having your books of accounts the reason being is it will be needed for you you or it will be needed for you to be able to calculate your taxable income for UA corporate tax purposes so when you're doing the filing you need to have your financial statements ready and that financial statements which is having your accounting income will be the first uh determining point in terms of calculation for your corporate tax liability so that's under the law now this accounting income that we have will be having um standards on how we will be doing the bookkeeping of or the recording of our transactions for our company so when I say standards the standards is actually based on recognition when are you going to recognize this as part of your expenses when are you going to recognize this as part of your um sales when are you going to recognize this as part of your assets or your liabilities and so on and so forth so as per the law the law states that there are three acceptable standards for FDA three accept acceptable standards what are those acceptable standards we have the IFRS which is the main standard that is actually Able by the um federal tax Authority and you have two options if ever you will not be able to meet the revenue recognitions okay or Revenue uh thresholds so if ever your company is having a revenue of more than 50 million first note that you have to have is you need to have another AED financial statements that's part of the requirements audited financial statements if ever you have a revenue more than 50 million and if ever you're a free zone that's actually one of the requirement second if ever you have a revenue of less than 50 million but has uh revenue of more than 3 million you need to follow if or you have an option an option not need an option to follow IFRS for smes so if ever your revenue is more than 3 million and less than 50 million you have an option to follow IFRS for smes so what's the difference between this two actually for full IFRS you have to follow the complete standards that has been adopted and then for IFR for is normally they have made it more simplified so if you wanted to make it more simplified in your books of accounts then you do IFRS for smes if ever your revenue is more than 3 million and less than 50 million but again if ever your revenue is more than 50 million you have the choice you have to follow full ifs okay now there's another option for us if ever our revenue is less than 3 million we have an option election on having the cash basis accounting our cash basis accounting is uh actually a most simplier approach in terms of recognition of your accounting income this is the simplest one now for the tax period that we have f it should be having a tax period of 12 month whenever when I say tax period is actually a coverage of the timeline of your um performance or recognition of from your books of accounts so normally the tax period is on an annual basis that should be on a 12-month period so it depends with you uh if what is the what is the uh fiscal period that you have chosen when you do the registration of your corporate tax but normally this fiscal period is available in your memorandum of Association so you could see it from there of your fiscal period and that certain fiscal period is relevant for you whenever you go for filing of your um corporate tax because the basis would be at the end of your period month period would be 9 months from the end of that will be the requirement for for you to uh file for corporate tax okay but normally this is for annual tax period okay but if ever you are having the first tax period normally it would be requiring you to file for the first tax return if if ever your uh period is actually uh let's say for example it is ending on December 31 2024 so the requirement is actually if every your tax period is six months more than six months and uh uh I mean more than six months and then uh less than 18 months then you will be needing to or sorry more than 18 months then you if ever we will be adding the the next annual period so if ever that will be the case then you will be needing to file for your short tax period so say for example your company has chosen an a tax period ending December 31 2024 and your company has been established on June or July 1 2024 since it is within 6 months period Then you are needed to file for corporate tax for the end of of uh December 31 202 uh 3 sorry 2023 the reason being is because the law has been established and effective on June 2023 then those period that you have been uh able to incorporate your company then that's the period that you are already covered for corporate tax so since you started on June one so that would be your first or June 1 or July 1 that will be your first tax perod that needs to be filed uh for uh this year 2024 so supposedly that that will be filed on September 2024 but they have provided an extension and it will be acceptable this December 31 2024 so you have to make sure that you have done the filing for corporate tasks okay and then for the natural person if ever your license is establishment or a civil liability comp oh sorry civil company then is considered as a natural person then you will be following the G Gregorian calendar so Gregorian calendar is actually from January to December again when we say Gregor Gregorian calendar that is uh automatically considered from January to December so for a natural person uh regardless of their license um if ever they have reached the threshold of 1 million and for the period with them that would be from January to December 31 2024 so uh they need to uh register for corporate tax if ever they have re reached 1 million and their filing period is the Gregorian calendar automatic okay so that is for tax uh tax period sending yes thank you now let's go back to the accounting income we mentioned that the applicable standards is actually either uh full IFRS or IFRS for smmes or we have the option of cash basis accounting so what is the difference of this full IFRS IFRS fores and cash basis accounting so when I say IFRS or full IFRS and IFRS for smmes that is considered as acral accounting and the cash basis accounting is based on the movement of your cash whether you have received cash that will be considered as your sales and if if ever you paid cash that will be considered as your expenses now let's have a difference between the two so example we have an example okay so for example coton company LLC was incorporated on January 1 2024 and a tax resident of uee it runs a coton Distribution Company and It prepares and maintains it in its account on cash basis accounting and its tax period is Gregorian calendar year company V or company sorry company uh a cotton company LC has not elected for small business relief so there's an option for you to uh go for a small business relief available under the corporate tax law okay so these are the transactions so they have paid and distributed payments received uh paid and distributed payments received that is amounting to 1,900,000 they have uh cotons uh distributed for the period of around 2.5 million and they have advanced payment received for future distributions of um 400,000 and then they have paid for employee of 330,000 and then employee um service rendered but not yet paid for 30,000 for one okay so they have paid uh they have an employee service rendered but not yet paid of 30,000 and then coton supplies received for the period of 2 million and then coton supplies paid for the period of 1.5 million and then they have a third party marketing service billing received for the period of 100,000 and then they paid for 50,000 so let's let's try to dissect the difference between cash bases and acral accounting okay so when we say it is considered as a cash basis what would be the what would be the sales amount that we will be having again if it is cash basis accounting what would be the sales basis we have here the cash collections if you are using Cash basis accounting it is more simplified so the basis for you to record your Revenue will be based on your cash collected so the cash collection that we have is actually 1,900 and then Advance payment that we have received 400,000 so so here the revenue that will be recognized under Cash basis accounting would be 2.3 million now question is it within the requirement for usage of cash basis accounting the answer is yes okay so since they have a revenue of Less Than 3 million then considered as okay to use cash basis accounting so they will be able to get the revenue here of 2.3 million now how about for the expenses what will be the expenses that they will be able to recognize so for again since it is a cash basis accounting so we will be recognizing what has been the payment that we have made so they have paid for employee of 300,000 this would be considered as part of your expenses and then how about for employee service rended but not yet PA so that will be excluded then we have here the cotton supplies paid for the period of 1.5 million that is uh included as part of the expenses and then a third party marketing Service uh that has been paid for the period of 50,000 so the simp player approach Cash Cash basis accounting revenue is 2.3 million and then your expenses is based also on your payments so you have paid 330 you have paid uh 1.5 million so 1880 and you have paid um 50,000 so you have 1880 ,000 as part of your expenses so that's how simple it is for cash basis accounting now for acral accounting if you're following uh acral accounting then you you will be recognizing what is the actual sales so here the actual sales is actually on the distributed cotons for the period so which is 2.5 million That's the basis of your revenue and then the actual expenses that you have incurred so here you have paid 330,000 and you have incured already 30,000 but has not yet paid so your total expenses for employee cost is 360,000 and then for your expenses you have your cotton supplies uh received for the period uh which is 2 million so disregarding this 1.5 it's only a payment so 2 million will be your expenses and then for third Market uh third party marketing Service uh expenses that will be considered as 100,000 okay so cash basis accounting Revenue 2.3 acral accounting 2.5 okay so 2.5 and 2.3 okay as part of our cost of sales we have 1.5 million as what what was the payment that we have made for the cotton distribution but the cotton that we have received and delivered were actually 2 million and then the gross profit is 800,000 so for cash basis accounting and then approval accounting 500,000 and then uh we don't have any other income so that is null null then for General administrative expenses that's for your employee cost so we have paid for 330,000 uh for Cash basis accounting but since we have incured also the 30,000 so that's considered as part of your expenses for acual accounting and then you have your sing uh selling and marketing expenses you paid for 50,000 so for cash basis accounting that will be considered as your expenses for acral accounting your full amount of 100,000 would be there okay so the profit for the year is uh for cash basis accounting that is 420,000 for acual accounting that is 40,000 do we have any oci um incomes so since we don't have so the accounting income that we have is 420,000 for cash basis accounting and then for acal accounting which is 40,000 okay so that's how we will be Computing for accounting income with acral accounting and cash basis accounting now for this acal accounting again it is based on IFRS standards so either you choose IFRS for smmes or you choose the full IFRS so for full IFRS there is actually standards on uh recognition of your Revenue when you will be recognizing their revenue including your expenses and so on and so forth so this is only a simplified version of the comparison between your cash basis accounting and your actual basis account now let's see if you're listening to our discussion let's go and launch another trivia so let's see if the this statement is true or false so an example of an exceptional circumstances and a reason to be permitted to use the cash basis accounting and could be where the taxable person expects to exceed 3 million threshold for only one tax period again is it true or false there is a circumstances or exceptional circumstances where Cash basis accounting is permitted if they exceed 3 million threshold for only one tax period is it true or false again here the requirement is you could follow the you could follow the cash basis accounting if their revenue does not exceed 3 million and if if it exceeds 3 million they would be following the acral accounting either they choose IFRS for ases or they have they will be applying full IFRS now the answer for this one for the trivia that we have is true under exceptional circumstances what are those exceptional circumstances if ever it is only happening for one tax period for one year and then for the next years it will go back to 3 million or it will be going back to Less Than 3 milon so if that will be the case that is acceptable for the FDA okay so the way to do that is actually for you to go and apply for um election of the cash basis accounting and then to request for the fda's approval on your um exceptional circumstances okay so that's part of your actions to be taken if ever you're going to use cash basis accounting again the answer for this one is true okay so it is under exceptional C cumstances so if it is only for one tax period that you exceed 3 million then that's absolutely fine but it should be having an approval by the FDA okay so that's for the trivia so now we have the difference or the reconciliation of difference between cash bases and acral accounting now let's go to income reconciliation so technically technically your accounting income as per UA corporate tax calculation is your tax base but when we try to do income reconciliation we try to understand what are those adjustments it's almost the same as if we are using the normal calculation of the corporate tax liability as if we are using it because the basis is actually accounting income and then we need to reconcile what are the difference between the acceptable taxable gross income and the acceptable deductible expenses to arrive with our taxable income so whatever would be the difference that should be reflected as part of your adjustments here okay so let's start with the reconcile reconciliation of your taxable gross income so question question taxable gross income in accounting income what are those that would be part of your taxable in gross income again and your taxable income what are those that is part of your your taxable gross income for your accounting income so either it will be coming from your sales it will be coming from your other income or it will be part of your other comprehensive income so these are the ones that is actually um to be part of your taxable gross income now the first adust adjustment that we have for your accounting income first adjustment if this would be this is our basis right for calculation so as what they have mentioned you have actually the realization election so you have here the realization election so what would be uh the first adjustment this is the first adjustment that we have realization election what is this realization election this is pertaining to your other comprehensive income so this is the first adjustment the question for this one is whether you're going to use realization B basis or you're going to use uh the normal basis of your comprehensive income so meaning are you going to record or report this one as full amount of your recognized comprehensive income or are you going to um use only what has been realized so here there is actually a difference between the two of realization and a realized one so when we say realization it means that it has already been converted so again for example if ever we have some forward contracts let's say and then on that certain forward contracts uh that we have or let's say an agreement uh we are buying um we are buying rice or Cottons in the future because of the fluctuation of the um prices of cotons we have made an agreement uh to another party that I will be buying this cotton for 75 each and uh if there's any excess or reduction for it you will be the one bearing the risk so normally at the end of the year they will be having a Reconciliation of this uh differen set say at the end of the year uh the value of the coton has reduced to 65 so we have instead of paying 75 we we um sorry uh instead of paying uh uh 65 we paid 75 so we have a loss there of uh 10 so that would be part of your um oci and then if ever you made it as a realization basis then you will be considering it only if this has uh this contract that you have has already been ended and you have paid the other party or you have uh received from the other party the benefit of your agreement so say for example the agreement that you have is 75 and uh six uh the actually 65 so you paid 65 for the other party and then the the 15 would be paid to the other party which you have agreed to gamble with the prices so that's what we call as forward contract so that's normally presented as part of your oci so realization basis if you already made a payment or the contract has already been ended then that's the time you will be doing the recognition but if ever the contract is for future 10 of the Year 75 then uh sorry 75 was agreed with you then they the price is 65 for at the end of the year and then on next year the prices change instead of 65 or the in in the year of the execution of your contract instead of 65 it becomes 85 so this way you will be having an income so if ever you did not off for realization basis then at the end of the year you will be needing to report that one but if you off realization basis from the time that the contract has been executed or the contract has been ended that's the time you will be recognizing the income so that's clear so that's first reconciliation first reconciliation is your realization basis then the next reconcilation that we will be having is actually your other income and your right Revenue so what are those for other income here these are considered there is a Reconciliation here for your second reconciliation that is your exemp income so what are the example of exam income first you have your dividends so normally normally whenever you have your um accounting uh income um calculation your dividends normally are presented as part of your other income you have it here as part of your dividend income so as per the UA corporate tax this dividend income is not part of your taxable gross income so meaning that should be reduced as as part of your accounting income that shouldn't be included so you have here exemp so that will be reduced so aside from that you also have the participating income so what is this participating income uh say for example you have um an income coming from the uh let's say another country you have a portion of maybe a share of the profit it's just like a dividend actually in nature but uh since there is a consideration of participating income then that also should be considered as an exempt income meaning that should be reduced also as part of your accounting income okay next the other adjustments that we will be having so we're okay actually where your taxable gross income so we will be having the realization basis which is coming from your oci and then we have as well the um exempt incomes that should be adjusted which are part of your either your sales and revenue if it is participating and then either it will be coming as well as part of your other income so that will be considered as Exempted for um calculation of of your um corporate tax liability now the second one is with deductible expenses now for your deductible expenses there is actually a consideration the consideration for your taxable expenses is correlated with your expenses here and your expenses here so either of these two what are those adjustments so you have the adjustments for number three you have nondeductible expenses so either adjustments for non-deductible expenses or expenses with limitation so limitation expenses that is actually your interest uh expense which is having a limit your um entertainment expense which is having a limit of 50% and the other one the other adjustment that we have fourth adjustment is the connected person so we have here the connected person adjustment also so connected person or related party this is what we call as transfer pricing consideration so connected person who are who are those connected persons so connected persons are the managers or owners of the company or possible uh brothers or sisters of the company that is actually paid for the benefit of rendering service with the company so say for example the normal example is on the license we have one owner LLC maybe a local and then we have one um one partner which is uh an expat who is actually acting as a manager of the company but since they are not employed directly with the company they are the one uh considered as a managing director but since they are also part of the owners of the company they are considered as connected person so there will be an adjustment for connected person in terms of recognizing them as part of your expenses year so normally you have here your management fees so for management fees that will be adjusted with your accounting income it will be added back provided that you don't have the documented research of this connected person so there should be a a marketable um analysis of this connected person that they have been rendering service with the company and this is the normal um salaries or Market salaries or fa value of Services of this connected person same goes with the related party for the Rel related party that is uh for example there's another company that we have been transacting with so we will be considering that right supervising so there should be a reporting documents with it an analysis of its company structure and then the documentation related to it okay so that's the fourth adjustment and then the um the next adjustment that we have is with regards to uh special adjustment so this is the four four adjustments related to deductable expenses the next one is the adjustment here and your taxable income which is correlated to the special adjustments for um any reliefs for specific transactions so say for example transfer of business so there might be some um income related to the transfer of business let's say for example the fair value of the business is 1 million and then the consideration that we have received is 1.5 million so that could be considered as part of the special adjustments normally it will be it will be reflected as your accounting income so that should that should not be a part of your taxable income so it will be reduced on your accounting income as well and then another consideration is your tax losses so that would be considered as an adjustment here on your taxable income so your accounting income here will be reduced by the taxable losses okay so that's for the income reconciliation I think we have limited time so the other detailed discussion of the income reconciliation for the expenses and then for the exemp incomes full details of it will be discussed on the next session okay so please be there on our next session for us to be able to discuss in full details of the exemptions so these are least actually I'll try to give it to you I'm not sure what let's try to remove this so remove all of this things okay so next so these are actually the least of the relevant adjustments for a while these are a list of relevant adjustments that is actually reflected so this one we have discussed for unrealized gains and losses we have discussed portion of exempt income and then for the deductions relief or specific transactions transfer pricing and tax losses this would be part of our special webinar series okay so please stay tuned at least you already have the difference between Cash basis accounting and then the reconciliation of your income the next topic that we will be having will be related to this okay