Hey there! Let's talk about the audit requirements for financial statements under the UAE Corporate Tax Law.
Who Needs to Have Audited Financial Statements?
Under the UAE Corporate Tax Law, certain businesses are required to prepare and maintain audited financial statements.
Here’s who needs to comply:
- Businesses with Revenue Over AED 50 Million: If your business’s revenue exceeds AED 50 million during the relevant tax period, you need to have your financial statements audited.
- Qualifying Free Zone Persons: Regardless of their revenue level, all qualifying free zone persons must also prepare audited financial statements.
Details of the Audit Requirement
- Threshold Application: The AED 50 million threshold is not prorated if the tax period is longer or shorter than 12 months.
- Audit Standards: The audit must be conducted by a UAE-registered auditor according to the standards set by Federal Law No. 12 of 2014 on the Regulation of the Auditing Profession and other relevant legislation.
- Tax Groups: If a tax group’s consolidated revenue exceeds AED 50 million, only the consolidated financial statements need to be audited, not the individual statements of the parent company and subsidiaries.
Special Cases
- Private Pension or Social Security Funds: These funds, if exempt from corporate tax, must have an auditor to confirm compliance with the provisions of Ministerial Decision No. 115 of 2023.
Practical Case Study
Example: Auditing Requirements for a Tax Group
Let's say Company X is part of a tax group along with Company Y and Company Z. Their individual revenues for the tax period are as follows:
- Company X: AED 30 million
- Company Y: AED 20 million
- Company Z: AED 10 million
The total consolidated revenue for the tax group is AED 60 million, which exceeds the AED 50 million threshold.
Steps:
- Prepare Consolidated Financial Statements: The tax group must prepare consolidated financial statements for the entire group.
- Conduct the Audit: A UAE-registered auditor must audit these consolidated financial statements to ensure compliance with the relevant standards.
- No Need for Individual Audits: Even though Company X's revenue is AED 30 million, which alone doesn’t meet the threshold, it’s the consolidated revenue that matters. Therefore, individual audits for Company X, Y, and Z are not required.
How Fastlane Can Help
Navigating the audit requirements and ensuring compliance can be complex, but Fastlane is here to help. We offer 'Smart Compliance' solutions to manage your corporate tax obligations smoothly.
Our services include:
- Advising on audit requirements and thresholds.
- Conducting Audit as we are qualified UAE-registered auditors.
- Ensuring timely and accurate preparation of financial statements.
With Fastlane, you can focus on growing your business while we take care of the intricate details of corporate tax compliance. Schedule a free consultation with us to see how we can help your business thrive in the UAE
