In 2023, the RBI issued a DP on provisioning per the ECL approach, which was largely acknowledged as a paradigm shift in how banks in India were required to provide financial assets like loans and investments. In response to comments received from stakeholders, the RBI issued a press release on 04 October 2023 and announced the constitution of a working group for independent inputs on technical aspects of ECL. While the final directions on ECL-based provisioning are awaited, the RBI issued final directions on the Classification, Valuation, and Operations of Investments on 12 September 2023. The issuance of revised directions on the classification, valuation, and operations of investments marks a significant shift in the financial reporting requirements of banking entities.

The Federal Tax Authority has issued the Federal Decree-Law No. 47 of 2022 on “Taxation of Corporations and Business” (the “CIT Law”), which levies a form of direct tax on corporations and business profits from the beginning of their first financial year commencing on or after 1 June 2023. For example, the first tax period will begin in January 2024 for the companies that follow January to December as their financial year. The Corporate Income Tax (“CIT”) Law, read with the Cabinet Decision No. 116 of 2022, provides that a taxable person’s taxable income exceeding AED 375.000 shall be subject to a 9% CIT rate in the relevant tax period. In the case of a qualifying free zone person, qualifying income will be taxed at 0%, and taxable income other than qualifying income will be taxed at 9%.

The Ministry of Corporate Affairs notified the Companies (Indian Accounting Standards) Amendment Rules, 2023 on 31 March 2023, which became effective for annual reporting periods beginning from 1 April 2023. These changes are applicable and effective to all entities that report under the Ind AS accounting framework for accounting periods beginning on/after the above-mentioned date.

The Institute of Chartered Accountants of India’s (ICAI) Exposure Draft (ED) is a welcome step in providing guidance on the transfer of capital reserve to free reserves, including guidance on the identification of triggers that call for such a transfer.

Recently, companies have increasingly been disclosing non-GAAP measures in their investor communication and capital markets-related offering documents. The rationale for using such non-GAAP measures is that they assist management in providing the users of financial information with an understanding of the company's key business drivers and enable management to present a perspective to users, which might not be possible only through GAAP measures.