Goodwill only arises in an acquisition, not in organic growth. If you buy a business for AED 5 million but its net identifiable assets are worth AED 3.5 million, AED 1.5 million is recorded as goodwill. Under IFRS (which applies in the UAE), goodwill is not amortised but is tested annually for impairment — if the business being acquired is worth less than originally paid, goodwill must be written down. For UAE corporate tax purposes, goodwill treatment in business acquisitions follows IFRS standards.
See also: IFRS, Balance Sheet, Corporate Tax (CT)
