UAE Enforces revised Corporate Tax Regulations: Audited Financial Statements Obligatory for Tax Consortia
UAE Announces Amendments to Enhance Business Compliance and Promote a Business-Friendly Environment
The United Arab Emirates (UAE) has unveiled a series of amendments aimed at ensuring compliance with global standards, boosting confidence among businesses in the distribution sector, and supporting a business-friendly environment. These amendments are part of the UAE's ongoing efforts to establish a competitive tax environment and underline its commitment to balancing regulatory clarity with ease of doing business.
The detailed guidelines for preparing audited special-purpose aggregated financial statements for UAE Corporate Tax compliance, as per the Federal Tax Authority (FTA), have been outlined. These financial statements, which form the foundation for calculating Corporate Tax returns precisely, are now mandatory for all businesses operating within the UAE, regardless of their size or location within a free zone.
In line with these guidelines, all financial statements prepared for UAE Corporate Tax purposes must strictly comply with International Financial Reporting Standards (IFRS). Complete records supporting these statements—ledgers, invoices, and related documents—must be kept for at least seven years and be made available for inspection by the FTA upon request.
To ensure timely compliance, audits must be completed well ahead of Corporate Tax filing deadlines, with the current deadline being September 30, 2025, for the financial year ending after June 1, 2023. Early preparation, including incorporating transfer pricing adjustments and documentation, is essential to avoid penalties and ensure full compliance.
Qualifying Free Zone Persons involved in the distribution of goods/materials within or from designated zones face further procedures specified by the FTA, implying extra scrutiny around these statements. Additionally, transfer pricing-related disclosures and documentation must be prepared for entities surpassing certain revenue and transaction thresholds.
These amendments also provide clarity for businesses operating within Free Zones and offer guidance for entities in the distribution sector to benefit from the Free Zone Corporate Tax regime. The UAE is working towards a competitive tax environment, and these amendments are designed to underline its ongoing efforts in tax regulation.
In summary, businesses must provide IFRS-compliant audited financial statements that are robust, transparent, and aligned with FTA’s corporate tax law requirements, supported by comprehensive documentation retained for at least seven years. Preparation must also integrate transfer pricing compliance and adhere to strict deadlines to maintain Corporate Tax compliance in the UAE.
These amendments are intended to provide clarity for businesses operating within Free Zones, offering guidance for entities in the distribution sector to benefit from the Free Zone Corporate Tax regime, and underlining the UAE's ongoing efforts in tax regulation. The UAE remains committed to supporting a business-friendly environment, ensuring compliance with global standards, and boosting investor trust and financing access.
[1] Federal Tax Authority (FTA) Guidelines for Preparing Audited Special-Purpose Aggregated Financial Statements for UAE Corporate Tax Compliance [2] IFRS Compliance for UAE Corporate Tax Purposes: What You Need to Know [3] Transfer Pricing Compliance in the UAE: A Comprehensive Guide [4] Understanding the UAE's Transfer Pricing Disclosure Requirements for Corporate Tax Compliance
- In line with the UAE's efforts to establish a competitive tax environment and promote a business-friendly environment, businesses operating within the UAE must prepare IFRS-compliant audited financial statements for UAE Corporate Tax purposes, ensuring transparency and compliance with global standards.
- To bolster investor trust and financing access in the UAE, all businesses, regardless of size or location within a free zone, are required to maintain IFRS-compliant financial statements, ensuring accurate calculation of Corporate Tax returns and adherence to strict deadlines, as well as incorporating transfer pricing adjustments and documentation.
