Financial Statement Preparation & Audit for UAE Corporate Tax

Preparation and Maintenance of Financial Statement and Audit (Corporate Tax in UAE)

Written By Fayas Ismail,
Published on December 11, 2024

Preparation and Maintenance of Financial Statement and Audit (Corporate Tax in UAE)

Financial Statements (Article 54) in conjunction with Ministerial Decision No. 82 of 2023 stipulate that Taxable Persons are obligated to prepare and maintain audited financial statements. The following categories of Taxable Persons are required to adhere to this mandate: - A Taxable Person whose revenue exceeds AED 50,000,000 (fifty million United Arab Emirates dirhams) during the applicable Tax Period. - A Qualifying Free Zone Person. Furthermore, in accordance with Ministerial Decision 114 of 2023, for the purposes of Corporate Tax, all entities must prepare standalone or consolidated financial statements by utilizing: - The International Financial Reporting Standards - The Accrual Basis of Accounting - The UAE dirham as the currency for financial reporting. ## Record keeping (Article 56) The Taxable Person is obligated to retain all records and documents for a duration of seven years following the conclusion of the Tax period. The Company is similarly required to preserve these records and documents for a period of seven years.

FAQ

1. Are UAE businesses required to maintain financial statements for Corporate Tax purposes?

Businesses subject to UAE Corporate Tax generally need to maintain appropriate financial records and supporting documents to determine taxable income and comply with tax requirements.

2. Is an audit mandatory for all businesses in the UAE?

No. Audit requirements can depend on the applicable UAE laws, the entity's legal structure, and other regulatory requirements. Corporate Tax compliance and statutory audit requirements should be considered separately.

3. How long should businesses maintain financial records in the UAE?

Businesses should retain relevant accounting records, financial statements, and supporting documents for the period required under UAE Corporate Tax legislation and applicable record-keeping requirements.

4. Why are accurate financial statements important for UAE Corporate Tax?

Accurate financial statements provide the accounting information needed to calculate taxable income and support the figures reported in a Corporate Tax return.

5. Can financial statements be used to support a Corporate Tax return?

Yes. Financial statements can provide the underlying accounting information used in preparing a Corporate Tax return, subject to applicable tax adjustments and UAE Corporate Tax rules.