Requirements for Audited Financial Statements for a Tax Group

The FTA now requires tax groups to prepare and submit audited financial statements as part of meeting UAE Corporate Tax obligations. This requirement is established by the Corporate Tax Law itself (Federal Decree-Law No. 47 of 2022).

If you want to understand that how to meet this requirement, the FTA has released a Public Clarification CTP007 to provide extra guidance on understanding the relevant rules in a better way. This document clarifies that a tax group must prepare “Aggregated Financial Statements,” which combine the financial results of all members of the tax group, and that these statements must be audited.

Article 1 – Definitions

In FTA Decision No. 7 of 2025, Aggregated Financial Statements mean putting together the individual accounts of the parent company and its subsidiaries in a Tax Group, using the method set out in Article 3.

Article 2 – Preparation and Submission of Special Purpose Financial Statements

  1. According to Clause 1 of Article 54 of the Corporate Tax Law, a Tax Group must prepare special purpose financial statements. These should be in the form of Aggregated Financial Statements and follow the framework set out in Article 3 of this Decision.
  2. As required under Clause 2 of Article 54 of the Corporate Tax Law as well as Clause 2 of Article 2 of Ministerial Decision No. 84 of 2025, a Tax Group’s Aggregated Financial Statements must be audited using a special purpose framework, following the International Standards on Auditing (ISA).
  3. Under Clause 1 of Article 54 of Corporate Tax Law, a Tax Group must submit its audited Aggregated Financial Statements to the Authority within nine months after the end of the tax period, unless the Authority gives another date.

Article 3 – Framework for Aggregated Financial Statements Preparation

  1. When preparing Aggregated Financial Statements, the individual financial statements of all Tax Group members must be combined, but any dealings or transactions between those members should be removed.
  2. The Aggregated Financial Statements must be prepared each year using the individual financial statements of all Tax Group members for that financial year.
  3. The Aggregated Financial Statements must follow IFRS or IFRS for Small and Medium-Sized Entities, but with the following specific rules:
  4. When preparing Aggregated Financial Statements, the individual financial statements of a Tax Group member that acquires another business should not include the effects of business combinations under IFRS 3 or consolidation rules under IFRS 10 that apply to Consolidated Financial Statements.
  5. Items such as goodwill, bargain purchase gains, or fair value adjustments to assets and liabilities that appear in IFRS-based consolidated financial statements should not be included in the Aggregated Financial Statements.
  6. The exception to rule (b) is when a business combination happens without buying a separate legal entity. In that case, the assets, liabilities, goodwill, or bargain purchase gain already included in the acquiring company’s own financial statements must also be fully included in the Tax Group’s Aggregated Financial Statements.
  7. Tax Group members must combine their financial statement items line by line. This includes investments shown by the Parent Company or Subsidiaries, as well as the matching equity entries of the Subsidiaries, and these should not be removed when preparing the Aggregated Financial Statements.
  8. If the Parent Company has recorded an impairment (loss in value) on its investment in a Subsidiary that it directly owns within the Tax Group, this impairment must stay and should not be removed in the Aggregated Financial Statements.
  9. When creating Aggregated Financial Statements, an impairment loss recorded by one subsidiary on its direct investment in another subsidiary within the same Tax Group must not be eliminated.
  10. The following rules must be followed when preparing Aggregated Financial Statements:
  11. Except for the case mentioned in Clause 3 of this Article, all income, expenses, unrealized gains or losses, and other transactions between Tax Group members must be removed.
  12. The financial statements of companies that are not part of the Tax Group cannot be included in the Group’s Aggregated Financial Statements.
  13. Dealings with companies outside the Tax Group should not be removed when preparing the Aggregated Financial Statements.
  14. Each Tax Group member must prepare its own financial statements in line with IFRS (or IFRS for SMEs).
  15. Every company within the Tax Group must follow same accounting policies when preparing its individual financial statements. This ensures that the financial data of all members can be combined accurately and compared on the same basis.
  16. The profit or loss combined in the Aggregated Financial Statements must be shown before tax.
  17. Investments in subsidiaries, joint ventures, or associates outside the Tax Group must be recorded at their original cost, reduced by any loss in value (impairment).
  18. The Aggregated Financial Statements must be reported in UAE Dirhams.

Article 4 – Presentation and Disclosures

Aggregated Financial Statements must include the following:

  • Aggregated Statement of financial position
  • Aggregated Statement of profit or loss
  • Aggregated Statement of other comprehensive income
  • Aggregated Statement of changes in equity

In addition, the notes must clearly disclose:

  • The framework applied in preparing the statements
  • The methodology used for aggregation
  • Important accounting rules, estimates, and decisions used while preparing the statements
  • Supporting explanations for the figures presented

Article 5 – Financial Statements for Members Exiting the Tax Group

  1. If a company leaves a Tax Group or if the Tax Group ends, that company must use the asset and liability values recorded in the Tax Group as the starting values in its own financial statements.
  2. As an exception to Clause 1 of this Article, if accounting rules do not allow using those values, the company leaving the Tax Group must calculate its taxable income as if the rules had allowed it.

Article 6 – Publication and Effective Date

  • This decision is published in the Official Gazette.
  • This requirement takes effect for any tax period that commences on or after 1st January 2025.