End of Service Benefits (EOSB) are more than a compliance requirement in the UAE — they are a material liability that, when misjudged, can distort your company’s financials and tax positioning. While many businesses focus on gratuity calculations only during employee exits, smart financial planning calls for regular, actuarially-evaluated EOSB valuations. This blog breaks down how EOSB impacts tax and what most companies overlook until it affects their audit or budget.
What Is EOSB from a Financial and Tax Standpoint?
Auditors are increasingly asking:
- Balance sheet (provisioning)
- Audit reports
- Tax adjustments (especially for deferred obligations)
Unrecorded or underestimated EOSB can skew your profit/loss reports, leading to tax misreporting or complications during statutory audits.
Common Mistakes That Trigger Tax and Audit Issues
Here’s what many UAE businesses get wrong:
- Assuming gratuity = EOSB liability (They’re not the same when calculated over time)
- Using outdated salary data
- Not accounting for long-term liabilities in financial projections
- Failing to provision for EOSB until employee exit
- Lack of actuarial evidence in financial statements (a red flag for auditors)
Why EOSB Valuation Is Critical for Tax Planning
Proper actuarial valuation gives you:
- A realistic view of what’s owed to employees — both current and projected
- A way to recognize liability on your books, aligning with IFRS / IAS 19
- Audit-ready documentation that stands up to scrutiny
- Insight into tax-deductible provisions (in jurisdictions where applicable)
For large or growing companies, this can also influence:
- M&A due diligence
- Year-end financial planning
- Internal budget allocation
What Auditors and Tax Advisors Look For
Companies often make mistakes such as:
- Have you recognized EOSB liabilities using actuarial methods?
- Is your computation compliant with UAE labour law and accounting standards?
- Do your HR/payroll numbers match what’s in your financial statements?
Without a formal valuation, your business may face:
- Audit delays
- Adjustment penalty
- Reputational risks
How Actuarial Experts Like RJAC Gulf Partners Help
At RJAC Gulf Partners, we deliver:
- Certified EOSB actuarial valuation reports
- Scenario analysis for workforce changes
- Alignment with audit standards and tax advisory guidelines
- Multi-jurisdiction EOSB assessments across UAE and the GCC
Whether you’re preparing for a year-end audit or restructuring your workforce, an EOSB valuation is a strategic necessity, not an optional line item.
EOSB isn’t just about end-of-service payouts — it’s a tax and compliance issue that requires data-backed foresight. Don’t wait for an auditor to flag the gap. Get ahead with actuarial evaluations that protect your business.
Ready for a tax-aligned EOSB valuation?
Contact RJAC Gulf Partners to book a consultation today.
Optimise benefits with employee benefits consulting UAE. Actuarial expertise in gratuity, pensions & post-retirement valuation services.