1. What is TAB (Tax Amortisation Benefit Factor)?

Definition: TAB is a financial metric used to calculate the present value of tax benefits from amortizing intangible assets.

Purpose: It helps businesses in the UAE and globally quantify the tax advantages of amortizing assets like goodwill, patents, or trademarks.

2. How Does the TAB Calculator Work?

The calculator uses the formula:

Where:

• \( TAB \) — Tax amortization benefit factor (dimensionless)
• \( T \) — Tax savings (AED)
• \( T_r \) — Tax rate (decimal, e.g., 0.20 for 20%)

Explanation: The formula accounts for the compounding effect of tax savings when amortizing assets over time.

3. Importance of TAB Calculation in UAE

Details: While UAE has no federal corporate tax, certain industries and free zones may have tax obligations. TAB is crucial for multinational companies with UAE operations that need to report taxes elsewhere.

4. Using the Calculator

Tips: Enter the expected tax savings in AED and the applicable tax rate as a decimal (e.g., 0.20 for 20%). Tax rate must be between 0 and 1.

5. Frequently Asked Questions (FAQ)

Q1: What's the typical tax rate to use in UAE?
A: Most UAE companies use 0% unless in a taxable free zone. For international reporting, use the parent company's tax rate.

Q2: How do I determine tax savings (T)?
A: Tax savings equals the amortization amount multiplied by the tax rate.

Q3: Why does TAB factor increase with higher tax rates?
A: Higher tax rates mean greater tax savings from amortization, thus increasing the benefit factor.

Q4: Is TAB relevant for all UAE businesses?
A: Primarily for companies with intangible assets and tax obligations either in UAE free zones or internationally.

Q5: How often should TAB be recalculated?
A: Whenever tax rates change or during annual financial reporting.