Financial Statement Audit Report for Corporate Tax in UAE

Financial Statement Audit Report for Corporate Tax in the UAE

Following the introduction of Corporate Tax in UAE, businesses in the country have been aggressively seeking services of top audit firms in Dubai. This helps them navigate through the newly introduced tax regime. Governing the taxation of businesses in the country, the corporate tax law has also outlined certain criteria for specific businesses that need to have their financial statements audited by expert auditors. 

 

To understand it better, audited financial statements responsibly confirm the accuracy and entirety of a business’s financial records. These statements are prepared by qualified auditing firms in UAE, who diligently examine the business’s documents, transactions, and internal controls. 

 

While the audit requirement for books under the corporate tax structure is not mandatory for all businesses, certain businesses are required by law to have their financial statements audited by reliable auditing firms in UAE.  



Businesses Mandated to Have Audited Financial Statements in UAE

As per the Ministerial Decision No. 82 of 2023, concerning the corporate tax regime in the UAE, it has been mandated that audited financial statements are to be presented by, 

  • Businesses with revenue exceeding AED 50 million: This means that businesses having an annual revenue surpassing AED 50 million, are obligated to prepare and maintain audited financial statements for corporate tax purposes. Moreover, mandatory financial audit statements ensure fiscal responsibility, transparency, and protection of stakeholder’s interests. Thus, businesses earning beyond this particular revenue threshold must have their financial statements audited by top auditing firms in Dubai, which will be in line with the International Financial Reporting Standards (IFRS).  

 

  • Qualifying Free Zone Persons: Irrespective of their revenue all Qualifying Free Zone Persons must furnish audited financial statements to meet corporate tax compulsions. These are essentially businesses that are subjected to 0% corporate tax on their taxable income which is derived from qualifying activities and transactions with other free zone persons. To continue to benefit from this tax exemption, it is paramount that all qualifying free zone persons maintain audited financial statements. In addition, this also ensures that they report their income accurately and refrain from engaging in any sort of tax evasion activities.    

Businesses Exempted from Preparing Audited Financial Statements

All businesses with annual revenue below AED 50 million and not classified as Qualifying Free Zone Persons are not mandated by the law to have their financial statements audited for corporate tax in uae criteria. However, it is always advisable to have your financial statements maintained by auditing firms in UAE, as it opens the door to enhanced financial control and better credibility with stakeholders among other such benefits.

Additional Reasons for Maintaining Audited Financial Statements

Apart from complying with corporate tax in UAE, maintaining audited financial statements can serve well for other reasons, which include: 

Licensing and Renewal Process

Despite not being qualifying free zone persons, certain free zone authorities in the UAE have made it compulsory for businesses to submit audited financial statements as part of their licensing and renewal procedure. 

Boosting Investor Confidence

The availability of audited financial statements can go a long way in boosting the trust and confidence of investors and potential buyers alike.    

Compliance with CB UAE’s Mandate

The Central Bank of the UAE has mandated all insurance brokers and exchange houses across the country to have their financial statements audited and submitted to the regulator.   

Requirement of Financial Institutions

As a criterion for granting loans and additional facilities, banks and financial institutions in the UAE may require businesses to provide audited financial statements. 

Sector-Specific Regulatory Requirements

The Department of Economy and Tourism imposes sector-focused regulations on hotels, which necessitates them to prepare and submit their audited financial statements to the authority.   

Lastly, the intent of maintaining audited financial statements is to ensure that the concerned businesses adhere to the legal framework by meeting their responsibility of paying a just portion of the taxes. As a result, it is fundamental that businesses contact top auditing firms in Dubai that can help them understand their obligations, along with ensuring benefits in securing loans and licenses, attracting investors, and boosting their reputation.    

 

If you have any questions related to corporate tax provisions or audit requirements that apply to your business? Feel free to reach out to A&A Associate, as our team will help you with their expertise and experience. 

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