IFRS 18 Is Coming: What It Really Means for Qatar Businesses ?
If you run finance for a company in Qatar — whether you’re preparing standalone accounts for a trading business or consolidated statements for a multinational branch — there is a new accounting standard headed your way that will change the shape of your income statement for the first time in over two decades.
It’s called IFRS 18, Presentation and Disclosure in Financial Statements, and it becomes mandatory for annual reporting periods beginning on or after 1 January 2027. For most Qatar entities with a calendar year-end, that means FY2026 is your comparative year — the numbers you close this coming year-end will need to be restated under the new rules and shown alongside your FY2027 statements. In practical terms, the clock has already started.
This article explains why the standard exists, what actually changes, and what your finance team should be doing between now and go-live.
Why the IASB Decided IAS 1 Wasn’t Enough?
Since 2001, IAS 1 Presentation of Financial Statements governed how companies laid out their income statement — and it was remarkably permissive. IAS 1 required a profit or loss figure, but it never mandated how a company got there. As a result, two competitors in the same industry could present “operating profit,” “EBIT,” or “adjusted earnings” using entirely different logic, in a different order, with different items included or excluded.
Investors and analysts had been telling the IASB for years that this lack of structure made it hard to compare companies — and harder still to trust the “adjusted” performance metrics that circulated in earnings releases and investor decks, because those numbers were never inside the audited financial statements at all.
IFRS 18 responds directly to that complaint. It replaces IAS 1, and while it keeps most of the balance sheet and equity guidance intact, it fundamentally rebuilds the statement of profit or loss.
The Core Change: Three Categories, Two New Subtotals
Under IFRS 18, every single income and expense item a company recognises must be classified into one of three categories:
- Operating — the default category, covering income and expenses from the entity’s main business activities and anything not specifically required to sit elsewhere.
- Investing — returns from assets that generate income largely independently of the entity’s other resources, such as associates, joint ventures, investment property, and surplus cash.
- Financing — income and expenses arising from liabilities that raise finance for the entity, including interest on borrowings and lease liabilities.
On top of that, the standard introduces two new mandatory subtotals: Operating Profit and Profit Before Financing and Income Tax. Every company, regardless of industry, will present these two lines in the same place, calculated the same way.
The good news: total profit or loss for the period does not change. IFRS 18 doesn’t alter how much profit a company reports — it changes how that profit is built up and displayed, and it removes much of the discretion companies previously had over sequencing and labelling.
A Twist Worth Knowing: “Main Business Activity” Matters
One nuance that catches finance teams off guard: companies whose main business activity is investing in assets or providing financing to customers — think holding companies, leasing businesses, or captive finance arms — are permitted to classify related income (dividends, interest on loans to customers, fair value gains) as Operating, even though the same item would sit in Investing or Financing for an ordinary trading company.
This means the classification exercise isn’t a mechanical checklist. Every entity first has to determine whether investing or financing is genuinely core to what it does, and that determination drives how dozens of line items get classified.
The Requirement Almost Everyone Underestimates: MPMs
Perhaps the most consequential — and most overlooked — part of IFRS 18 is the new concept of a Management-Defined Performance Measure (MPM).
If your company uses terms like “adjusted EBITDA,” “underlying operating profit,” or “core net income” in investor presentations, press releases, or board packs, and that measure isn’t one of the standard IFRS subtotals, it is very likely an MPM under IFRS 18. From the effective date, MPMs must be:
- Disclosed together in a single, dedicated note in the financial statements
- Reconciled, line by line, to the nearest IFRS-defined subtotal
- Explained — including why management believes the measure is useful, and the tax effect of every reconciling item
- Subject to audit, because they now sit inside the financial statements rather than in a separate, unaudited investor pack
For many companies, this is the single biggest behavioural change IFRS 18 brings. Numbers that used to live comfortably outside the audit boundary now need the same rigor, evidence, and consistency as the primary statements.
What Else Is Affected?
IFRS 18 also brings consequential amendments to:
- IAS 7 (Statement of Cash Flows) — the operating section of the cash flow statement must now start from Operating Profit rather than profit before tax, and the choices available for classifying interest and dividends received or paid are narrower than before.
- IAS 33 (Earnings per Share) — presentation must align with the restructured income statement.
- IAS 34 (Interim Financial Statements) — interim reports adopt the same categories and MPM disclosures from the date of initial application.
- IAS 8, which absorbs several presentation-related paragraphs previously found in IAS 1.
What Qatar Businesses Should Do Now?
The retrospective nature of IFRS 18 means the real deadline isn’t 1 January 2027 — it’s the close of your FY2026 comparative period. We recommend clients begin with four steps:
- Run a full impact assessment — map every existing income statement line to Operating, Investing, or Financing, and flag any item where the “main business activity” test needs judgement.
- Inventory your non-GAAP metrics — identify every subtotal used externally today (board packs, lender covenants, investor communications) and determine which will become MPMs requiring reconciliation.
- Update systems and chart of accounts — general ledger tagging and consolidation templates need to capture the new categories at the point of entry, not as a year-end reclassification exercise.
- Prepare a shadow FY2026 statement — building your FY2026 numbers under IFRS 18 in parallel with your existing close gives your team a dry run before the numbers actually count as your comparative.
Final Thought
IFRS 18 is the most significant change to income statement presentation in a generation. It won’t change how much profit your business reports, but it will change how that profit is explained — to your board, your lenders, and your investors. Companies that start the classification and systems work in 2026 will walk into 2027 with a straightforward transition. Those that wait will be restating comparatives under pressure at year-end.
MBG Corporate Services’ Audit, ICV and Accounting/CFO Advisory team is currently running IFRS 18 impact assessments and shadow-statement exercises for clients across Qatar. If you’d like to understand how this standard will reshape your specific financial statements, get in touch with our team at Al Jazeera Tower, West Bay, Doha.
