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Criteria for Audited Financial Statements for Corporate Tax announced

Ministerial Decision No. 82 of 2023 specifies categories of Taxable Persons required to maintain Audited Financial Statements

Corporate Tax Law Provisions

  • The Federal Tax Authority (“FTA”) is empowered to ask a Taxable Person to furnish its financial statement
  • The Minister is empowered to specify categories of Taxable Person who are required to maintain audited financial statements.

Recent Ministerial Decision – Following persons are required to maintain Audited Financial Statements

  • A Taxable Person deriving Revenue exceeding AED 50 million during the relevant Tax Period; OR
  • A Qualifying Free Zone Person

MCA Comments

  • This is one of the key decisions of the corporate tax law. It depicts the UAE’s commitment to ease of doing business.
  • Higher threshold of AED 50 million revenue for audited financials, will give enormous compliance relief to small and medium enterprises.
  • Maintaining Audited Financial Statements would be utmost important for Qualifying Free Zone Persons, to obtain benefit of 0% tax on Qualifying Income.
  • All Qualifying Free Zone Persons are required to have audited financial statement, irrespective of the revenue amount.
  • Our recommendation is to maintain financial statement, even if audit not applicable. Financial Statement will act as a base for tax return filing and audit by the FTA.

Disclaimer: UAE Corporate Tax (CT) Law has been recently introduced. This is a summarised version of the CT legislation and it is advised to refer to the detailed law provisions prior to initiating any decisions.

Please feel free to contact us for any further clarification/impact assessment assignments.

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