UAE Corporate Tax Rules for Audited Special Purpose Financial Statements

Audited Special Purpose Financial Statements for the purpose of the UAE Corporate Tax

The Federal Tax Authority (FTA) issued Decision No. 7 of 2025 on the Determination of the Requirements for Preparing and Maintaining Audited Special Purpose Financial Statements for a Tax Group for the purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses and its amendments.

These requirements ensure consistency, transparency, and compliance with the UAE’s CT law and relevant laws and standards for tax group financial reporting. The Decision is Effective for tax periods commencing on or after 1 January 2025.

Key Requirements:

The key requirements for tax group financial statements, as outlined in the Decision, are:

1. Preparation of Aggregated Financial Statements:

1. • Tax groups must prepare special-purpose financial statements in the form of Aggregated Financial Statements. ​
   • These statements must aggregate the parent company’s and subsidiaries’ standalone financial statements, eliminating transactions between members. ​

2. Auditing Requirements:

1. • Aggregated Financial Statements must be audited under a special purpose framework in accordance with International Standards on Auditing (ISA). ​

3. Submission Deadline:

1. • Audited Aggregated Financial Statements must be submitted to the Federal Tax Authority no later than nine months from the end of the relevant tax period. ​

4. Compliance with Accounting Standards:

1. • Aggregated Financial Statements must comply with International Financial Reporting Standards (IFRS) or IFRS for SMEs. ​
   • Uniform accounting policies must be used across all members of the tax group. ​

5. Specific Adjustments:

1. • Certain adjustments, such as goodwill, gain on bargain purchase, and fair value adjustments, are excluded unless business combinations occur without acquiring a separate legal entity. ​
   • Impairments recorded by the parent company or subsidiaries over investments within the tax group should not be eliminated. ​

6. Principles for Aggregation:

1. • Income, expenses, unrealized gains and losses, and transactions between tax group members must be eliminated. ​
   • Transactions with entities outside the tax group must not be eliminated. ​
   • Pre-tax profit or loss of members must be aggregated. ​

7. Presentation and Disclosure:

1. • Aggregated Financial Statements must include:
     • Statement of financial position. ​
     • Statement of profit or loss. ​
     • Statement of other comprehensive income. ​
     • Statement of changes in equity. ​
   • Disclosure requirements include the framework, basis of aggregation, accounting policies, estimates, judgments, and explanatory notes. ​

8. Currency:

1. • Aggregated Financial Statements must be presented in United Arab Emirates Dirham. ​

9. Members Leaving the Tax Group:

1. • Members leaving the tax group must adopt the values of assets and liabilities recorded by the tax group as opening values in their standalone financial statements, unless accounting standards prohibit this. ​

The Aggregated Financial Statements should be prepared as follows:

1. Basis of Aggregation:

1. • Aggregate the standalone financial statements of the members of the tax group, eliminating transactions between members. ​

2. Annual Preparation:

1. • Prepare the Aggregated Financial Statements annually based on the standalone financial statements of the members for the relevant financial year. ​

3. Compliance with Standards:

1. • Use International Financial Reporting Standards (IFRS) or IFRS for SMEs. ​
   • Uniform accounting policies must be applied across all members of the tax group. ​

4. Specific Adjustments:

1. • Exclude accounting implications of business combinations under IFRS 3 and consolidated financial statements under IFRS 10 for aggregation purposes. ​
   • Exclude adjustments related to goodwill, gain on bargain purchase, or fair value adjustments unless business combinations occur without acquiring a separate legal entity. ​
   • Do not eliminate impairments recorded by the parent company or subsidiaries over investments within the tax group. ​

5. Line-by-Line Aggregation:

1. • Perform a line-by-line aggregation of financial statement captions, including investments and equity recorded by members of the tax group. ​

6. Elimination of Transactions:

1. • Eliminate income, expenses, unrealized gains and losses, and other transactions between members of the tax group. ​
   • Do not eliminate transactions with entities outside the tax group. ​

7. Pre-Tax Profit or Loss:

1. • Aggregate the pre-tax profit or loss of the members of the tax group. ​

8. Valuation of Investments:

1. • Carry investments in subsidiaries, joint ventures, and associates outside the tax group at cost less impairment. ​

9. Currency:

1. • Present the Aggregated Financial Statements in United Arab Emirates Dirham. ​

Inter-Group Transactions:

Transactions between Tax Group members are treated as follows:

1. Elimination of Transactions:

1. • Any income, expenses, unrealized gains and losses, and other transactions between members of the Tax Group must be eliminated when preparing the Aggregated Financial Statements. ​

2. No Elimination for External Transactions:

1. • Transactions with entities outside the Tax Group must not be eliminated for the purposes of preparing the Aggregated Financial Statements. ​

If a Tax Group ceases to exist, the implications are similar to when a member leaves the Tax Group:

1. Adoption of Values:

1. • Each former member of the Tax Group must adopt the values of the relevant assets and liabilities as recorded by the Tax Group as the opening values in their standalone financial statements. ​

2. Exception for Accounting Standards:

1. • If the applicable accounting standards do not permit using such values, the former members must calculate their taxable income as if the accounting standards had allowed using those values. ​

Need Expert Guidance?

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