UAE Corporate Tax: Financial Statement Rules for Tax Groups

UAE Corporate Tax Reminder: Financial Statement Requirements for Tax Groups

What Every UAE Business Needs to Know from 1 January 2025

The UAE Corporate Tax framework continues to evolve, with the introduction of Ministerial Decision No. 84 of 2025 and the Federal Tax Authority (FTA) Public Clarification CTP007, which significantly change the financial reporting obligations for businesses, particularly Tax Groups.

These developments establish not only who is required to prepare audited financial statements, but also introduce a completely new reporting framework for Tax Groups through Special Purpose Aggregated Financial Statements.

This article summarizes the key requirements and their practical implications.

1. The Legal Framework

The financial statement requirements for Corporate Tax purposes are primarily governed by:

• Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses
• Ministerial Decision No. 114 of 2023 (Accounting Standards and Methods)
• Ministerial Decision No. 84 of 2025 (Audited Financial Statements)
• FTA Decision No. 7 of 2025 (Requirements for Preparing Special Purpose Financial Statements for Tax Groups)
• FTA Public Clarification CTP007 (Aggregate Financial Statements and Audit Requirement for Tax Groups)

Together, these regulations establish the financial reporting obligations for taxable persons in the UAE.

2. Who Must Prepare Audited Financial Statements?

Ministerial Decision No. 84 of 2025 categorizes taxpayers into three groups.

A. Taxable Persons (Other than Tax Groups)

A taxable person must prepare and maintain audited financial statements where:

• Revenue exceeds AED 50 million during the relevant Tax Period.

Businesses below this threshold are generally not required to maintain audited financial statements solely for Corporate Tax purposes, unless another legal or regulatory requirement applies.

B. Qualifying Free Zone Persons (QFZPs)

Every Qualifying Free Zone Person must prepare and maintain audited financial statements, irrespective of revenue.

This reflects the importance of audited financial information in supporting the application of the 0% Corporate Tax regime available to qualifying Free Zone entities.

C. Tax Groups

One of the most significant changes introduced by Ministerial Decision No. 84 of 2025 is the requirement that:

All Tax Groups must prepare and maintain audited special purpose financial statements, regardless of their revenue.

This requirement applies to Tax Periods commencing on or after 1 January 2025.

Unlike the previous rules under Ministerial Decision No. 82 of 2023, there is no AED 50 million revenue threshold for Tax Groups.

3. What are “Special Purpose Financial Statements”?

This is where many businesses have questions.

Ministerial Decision No. 84 establishes the obligation but does not explain what these financial statements should look like.

The detailed guidance is provided through:

• FTA Decision No. 7 of 2025
• FTA Public Clarification CTP007

These documents explain that Tax Groups must prepare:

Aggregated Financial Statements

These are financial statements prepared solely for UAE Corporate Tax purposes.

They are not the same as the consolidated financial statements prepared under IFRS for statutory reporting.

4. Aggregated Financial Statements vs. IFRS Consolidated Financial Statements

Although the two reports may appear similar, they serve different purposes.

Accordingly, businesses should not assume that their existing consolidated financial statements satisfy the Corporate Tax requirements.

5. How are Aggregated Financial Statements Prepared?

The FTA requires Tax Groups to:

Step 1

Prepare standalone financial statements for each member of the Tax Group.

Step 2

Aggregate the financial statements of:

• Parent Company
• Every subsidiary forming part of the Tax Group

Step 3

Eliminate intercompany transactions and balances, including:

• Intercompany sales
• Intercompany purchases
• Loans between group members
• Receivables and payables
• Unrealised gains and losses
• Other internal transactions required to be eliminated under the Corporate Tax framework

The objective is to present the Tax Group as a single taxable person.

6. Consistency Requirements

All Tax Group members should:

• Apply the same accounting standards
• Use the same accounting policies
• Have the same financial year

This ensures consistency when preparing the Aggregated Financial Statements.

7. Required Financial Statements

The Aggregated Financial Statements should generally include:

• Statement of Financial Position
• Statement of Profit or Loss
• Statement of Other Comprehensive Income (where applicable)
• Statement of Changes in Equity
• Cash Flow Statement
• Notes to the Financial Statements

The FTA also requires specific disclosures, including:

• Confirmation that the statements are prepared as special purpose financial statements for Corporate Tax purposes.
• Identification of Tax Group members.
• Ownership and voting percentages.
• Significant accounting policies.
• Explanatory notes supporting the reported figures.

8. Audit Requirements

Where an audit is required under Ministerial Decision No. 84:

• The audit should be performed in accordance with the International Standards on Auditing (ISA).
• The audit covers the Aggregated Financial Statements, not the statutory IFRS consolidated financial statements.

The audited Aggregated Financial Statements should be maintained and submitted to the Federal Tax Authority together with the Corporate Tax Return.

9. What Happens if a Company Leaves a Tax Group?

The FTA guidance also addresses situations where:

• a subsidiary exits a Tax Group; or
• the Tax Group ceases to exist.

In such cases, the departing entity should continue using the accounting basis and asset values adopted by the Tax Group for Corporate Tax purposes. This ensures continuity in tax calculations and prevents unintended tax advantages or disadvantages arising from changes in group membership.

10. Practical Steps for Businesses

Businesses should begin preparing for compliance well in advance of year-end.

Recommended actions include:

✓ Confirm whether the entity forms part of a Tax Group.

✓ Determine whether audited financial statements are required under Ministerial Decision No. 84.

✓ Review whether current accounting systems can produce Aggregated Financial Statements.

✓ Align accounting policies across Tax Group members.

✓ Identify intercompany balances requiring elimination.

✓ Coordinate with external auditors early in the reporting process.

✓ Ensure all required disclosures are incorporated into the financial statements.

How XB4 Can Help

Our Corporate Tax team assists businesses with:

• Assessing financial statement obligations under the UAE Corporate Tax regime.
• Preparing Special Purpose Aggregated Financial Statements for Tax Groups.
• Reviewing accounting policies and intercompany elimination adjustments.
• Supporting Corporate Tax compliance and FTA reporting requirements.
• Coordinating with external auditors to facilitate timely completion of the audit process.

If you would like to understand how these new requirements apply to your business or Tax Group, our specialists are available to assist.