DMCC Approved Audit Firm in Dubai

Dubai is home to a large number of free zones, which are a source of attraction to international investors and one of the most notable is the Dubai Multi Commodities Centre (DMCC). The authority requires organizations registered in this free zone to adhere to financial reporting and audit standards. The means all the registered businesses should appoint one of the DMCC approved auditors who will examine their financial statements to ensure they comply with the accounting standards and applicable regulations of DMCC.

Selecting an appropriate auditing firm can assist companies to complete their audits in a timely manner, have an independent assessment of how their business is performing, review of internal control system, and strengthen financial discipline of the company. So, the audit is not only to comply with DMCC requirements, but to benefit your organization through a transparent financial review.

KEY POINTS

• All the companies operating in DMCC free zone are required to conduct annual audits through any of the DMCC approved auditors.
• Businesses are required to submit their audited financial statements to DMCC within 6 months after the financial year is over.
• Companies need to select the auditor from the official DMCC list of audit firms to stay in compliance with the free zone regulations.

Dubai Multi Commodities Centre (DMCC) at a Glance

The Dubai Multi Commodities Centre (DMCC) is a leading international free zone and business hub in Dubai. It was established in 2002 to make Dubai one of the best international gateways for commodity trading and enterprise development.

DMCC has expanded considerably over the years and hosts over 26,000 companies from more than 180 countries. These firms are involved in different sectors, such as commodities trading, technology, financial services, consulting, logistics and manufacturing.

DMCC plays a significant role in the economy of Dubai and contributes significantly to foreign direct investment in the emirate.

Dynamic business environment and world-class infrastructure are some of the advantages associated with this free zone. It consists of two significant developments:

• Jumeirah Lakes Towers (JLT)
• Uptown Dubai

These places accommodate 100,000 residents, visitors, and professionals who work and live within the community. DMCC is also an internationally recognized free zone that has been rated among the best free zones in the world. It has received the award of a “Global Free Zone of the Year” several times due to its robust business environment and investor-friendly policies.

Key Highlights of DMCC

• Business-friendly tax environment
• 0 percent tax on personal income
• Prime location, modern infrastructure and transportation access
• Flexible office solutions for businesses of all sizes
• 100 percent foreign ownership of companies, meaning you don’t need to involve an Emirati local partner
• Unrestricted repatriation of profits
• Digital services via DMCC Member Portal (DMCC uses all the possibly technologies in its disposal)
• Vibrant community with thousands of residents and professionals
• Networking opportunities with over 26,000 growing firms
• Simple, easy, and cost effective company setup in DMCC

Types of Business Licenses in Dubai Multi Commodities Centre (DMCC)

Businesses operating in DMCC are required to obtain an appropriate license according to their activities. The different types of licenses available in the free zone are:

• Trading License: A trading license enables companies to import, export, distribute and store goods in the UAE and internationally.
• Service License: This license is issued to those companies offering professional or consultancy services like marketing, IT consulting, legal consulting, or financial advisory.
• Industrial License: Industrial licenses are granted to companies that deal with manufacturing or processing activities in designated areas.
• E-Commerce License: This license has been launched for the businesses that deal with online trading and digital commerce activities.
• Crypto and Proprietary Trading License: DMCC has also introduced specialized licenses for companies involved in digital asset and crypto-related activities in its regulatory framework.

Each license category can have different regulatory and reporting requirements, including compliance with DMCC audit requirements.

Corporate Tax and Cryptocurrency in Dubai Multi Commodities Centre (DMCC)

Corporate Tax in DMCC

With the introduction of the UAE Corporate Tax in 2023, companies operating in free zones, such as DMCC, must follow the tax regime developed by the Federal Tax Authority. DMCC registered entities are eligible to enjoy a 0 percent corporate tax rate on qualifying income if they meet the criteria of a Qualifying Free Zone Person (QFZP) and comply with all the regulatory provisions. However, companies with non-qualifying income will be charged with the normal UAE corporate tax rate of 9 percent. If your company fulfills the QFZP and qualifying income requirements, the audit becomes mandatory for UAE corporate tax filing as well.

Cryptocurrency in DMCC

The Dubai Multi Commodities Centre has made a major contribution to the development of the digital asset sector in the UAE. In May 2021, the authority issued its first license related to crypto assets, which allows companies to conduct over-the-counter transactions of digital currencies. Since then, DMCC has continued to develop and grow its digital finance ecosystem through initiatives such as the DMCC Crypto Centre, which supports block chain innovators, fintech businesses and companies working with virtual assets.

Organizations operating in this sector are still required to adhere to the financial reporting standards and must have their financial statements reviewed by approved auditors in DMCC in order to remain compliant with regulatory requirements.

Also Read: How Do Different Countries Tax Cryptocurrencies

Awards Earned by DMCC

Award	Year
Deal of the Year Award	2007
Facilitating the Most Innovative Structured Transaction Award	2007
Best Shariah Compliant Product Provider	2010
Best Fund of Funds Award	2010
Best Fund-of-Funds – Failaka Islamic Fund Award	2010
Global Islamic Finance Award – Best Supporting Institution	2014
fDi Global Free Zones of the Year	2015
fDi Global Free Zones of the Year	2016
fDi Global Free Zones of the Year	2017
fDi Global Free Zones of the Year	2018
fDi Global Free Zones of the Year	2019
fDi Global Free Zones of the Year	2020
fDi Global Free Zones of the Year	2021
fDi Global Free Zones of the Year	2022

Requirement for Annual Audit by DMCC Approved Auditors

An external audit for all the DMCC companies is mandatory as per Section 11, Article 57 of the DMCC Companies Limited by Guarantee Regulations. But what are the requirements of an annual audit for DMCC companies? Entities registered with DMCC must maintain adequate financial records and prepare year-end financial statements for audit in accordance with the applicable accounting standards. The specific requirements in relation to accounts, auditing, and financial management are as follows:

Preparation of Accounts

1) The directors of every company are required to prepare yearly financial statements. These financial statements should:

• Be prepared in accordance with International Financial Reporting Standards (IFRS), and International Accounting Standards (IASs)
• Give a fair and accurate picture of the financial position and performance of the company
• Be approved and signed by at least one of the authorized directors on behalf of the shareholders (if more than one shareholders)

2) In case of a holding entity, you must prepare group financial statements as well as individual company accounts.

3) Dormant companies do not need to prepare financial statements unless the shareholders who represent at least 10 percent of the organization’s membership request the management to prepare the accounts. However, they must give notice for the same within 1 month after the end of the financial year.

4) Companies must ensure that their accounts are prepared in line with IFRS/IAS within 6 months of the financial year end, and are:  

• Ready and approved by Directors
• Reviewed by DMCC registered auditors
• Presented to shareholders in the annual general meeting

Following the approval of accounts, the entity is obliged to submit their audited financial statements and report of the auditor with the DMCC Registrar within five business days of the meeting.

Maintenance of Accounts

1) Companies that are registered under DMCC must maintain adequate accounting documents that describe the business transactions and financial activities in detail.

These records must:

• Show the financial position of the business accurately
• Allow Directors of the company to ensure that the financial statements are in line with the applicable regulations, specifically section 11 of the Article 57 of the DMCC Companies Limited by Guarantee Regulations

2) Accounting records of the Entity must be:

• Stored at the registered office of the company or otherwise any other place that is approved by the Directors and suitable for security of business data
• Available for review or inspection by company’s auditor or by an officer of the DMCC
• Tax-related records must be kept for at least five years
• Real estate-related accounting records must be stored for at least fifteen years.

3) Company members have the right to demand the latest audited financial statements and the auditor’s report. If requested, this should be made available to them within a period of five business days.

Penalties for Non-compliance with DMCC Audit Regulations

What are the penalties of non-compliance with audit deadlines in the Dubai Multi Commodities Centre (DMCC)? Some of the potential consequences are:

• Financial or administrative fines
• Temporary discontinuation of some services of the firm
• Delay in renewal of trade license
• Restrictions on operations of the company until full compliance is achieved

Therefore, businesses should always engage with audit firms in DMCC that are certified by the authority to ensure timely completion and submissions of audits.

Process of Audit in Dubai Multi Commodities Centre (DMCC)

The audit process in DMCC is more or less same as any other audit. Below is the step-by-step process of audit in DMCC.

• The company appoints one of the auditors authorized by Dubai Multi Commodities Centre.
• Financial statements are reviewed by the DMCC auditor along with verification of business transactions with supporting documents. The auditor also verifies that the company is not operating without a valid trade license.
• The audit report is prepared in line with the International Financial Reporting Standards (IFRS).
• The audit firm issues the audited financial statements along with their audit opinion. This report is then submitted to DMCC by the company.
• DMCC representatives review the audit report. In case they have any questions or clarifications, they contact the appointed audit firm for the same.
• If DMCC concludes that the auditor has not performed the audit with utmost responsibility, due care, transparency, and as per the International Accounting Standards, the auditor can be penalized and removed from the approved auditors list of DMCC.

What Documents Are Required for a DMCC Audit?

• Company’s trial balance
• Profit & loss, balance sheet, and other financial reports generated from the accounting system, such as general ledger, aged receivables and payables report.
• Invoices, bills, journal vouchers, sales and purchase returns and credit card statements for the sample transactions selected by DMCC auditors
• All the bank statements of your company (local and international) applicable to the audit period
• Reconciliation of Value Added Tax filing and UAE corporate tax filing (for non-qualifying income) with the books of accounts.
• Schedule of fixed assets and prepayments
• Gratuity calculation to ensure the year-end provision for UAE end-of-service benefits has been correctly calculated and booked in the accounts
• Previous year’s audited financial statements
• Updated trade license of the Entity
• Certificate of registration (if applicable)
• Share certificate
• Memorandum of Association (MoA) / Articles of Association (AoA)
• Passport copy, Emirates ID, and Visas of shareholders of the company to perform KYC

Roles and Responsibilities of Audit Firms in DMCC

The DMCC auditors are expected to review the financial documents of the company and ensure that they are in compliance with the regulatory requirements

Some of the roles and responsibilities of auditors include the following:

• Ensure that proper accounting records have been kept by the company
• All the business transactions are supported by related supporting documents
• Accounts have been prepared in accordance with IFRS/IASs
• The company is operating as per the activities allowed in the trade license
• Income and expenses are not overstated or understated
• Assets and liabilities are not overstated or understated
• The Entity is not involved in any money-laundering or fraudulent activities

Auditors can also access company records and demand more information from management whenever required. In case the auditor feels that the company has failed to comply with the regulations, this should be mentioned clearly in the audit report.

Vertix Auditing – Your Certified DMCC Auditor

Vertix Auditing is one of the leading accounting company providing audit and assurance services to a wide range of companies registered in different free zones and mainland of the UAE. We have the knowledge and experience about specific audit and financial reporting requirements of DMCC. We also understand the relevant deadlines and administrative penalties of non-compliance. Therefore, we ensure you fulfill your audit and reporting requirements on time and also comply with other applicable rules and regulations of DMCC.

Frequently Asked Questions (FAQs)

1 – How to find auditors authorized by DMCC?

The official DMCC website provides the list of DMCC approved auditors in Dubai. This list includes companies that are registered and authorized to perform audits for companies in the free zone.

2 – How can you verify whether an auditor is an approved audit firm of DMCC?

You can either contact DMCC to verify if the auditor is a registered audit firm or refer to the list of audit firms approved by DMCC.

3 – What are the services provided by auditors to the DMCC companies?

Some of the services offered by auditors include:

• External audit services
• Internal audit services
• Tax compliance services to corporation
• VAT registration and filing services
• Bookkeeping and accounting support
• Reporting and financial advisory services

4 – What are the top-rated auditing firms approved by DMCC?

Some of the leading audit firms include PwC, EY, KPMG, Deloitte, BDO, Vertix Auditing, etc. These companies offer professional audit and assurance services to companies that operate under the UAE regulatory framework.

5 – What is the cost of an annual audit for a DMCC registered business?

The cost of an annual audit is determined based on several factors, such as the size of the company, number of employees and bank accounts, local or international business operations, number of transactions during the year, etc. One of the other key factors that determines the audit fee is the audit risk. The higher the audit risk is, the higher the fee will be.  You can compare audit fees and service packages for businesses registered in DMCC by using our free Auditing Fee Calculator.

6 – Advantages of engaging DMCC approved auditors for your company

There are a number of benefits of working with approved auditors, some of them are as follows:

• Adherence to the DMCC rules and regulations
• Proper and timely financial reporting
• Increased transparency and credibility of the business
• Corporate tax and VAT compliance
• Easy and straight forward process of renewing your trade license

7 – What is the deadline for DMCC audit report submission?

Ideally, the audit report needs to be submitted within 6 months after the year-end.

8 – How much time will a DMCC company audit take to complete?

The timeline of the audit is dependent on the volume of transactions and the business complexity. It also depends how accurate your bookkeeping and accounting is. Typically, an audit can take between 2 to 4 weeks provided all the required information and supporting documents are available.