Maintaining accurate financial records is essential for calculating and filing Corporate Tax.
In this blog, we'll cover the requirements for financial statements and the importance of compliance.
Financial Statements
Financial Statements are critical for documenting the financial activities and performance of a business. They serve as the basis for calculating a company's Taxable Income.
Accounting Methods
- Cash Basis of Accounting: For businesses with Revenue not exceeding AED 3,000,000 in the Tax Period.
- Accrual Basis of Accounting: Mandatory once Revenue exceeds AED 3,000,000, except under exceptional circumstances approved by the FTA.
All financial statements must adhere to International Financial Reporting Standards (IFRS). Businesses with Revenue not exceeding AED 50,000,000 can apply IFRS for SMEs.
Audited Financial Statements
Certain businesses must maintain audited financial statements, including:
- Companies with Revenue exceeding AED 50,000,000 during the Tax Period.
- Qualifying Free Zone Persons.
Case Study 1: Accurate Financial Reporting
Company C ensured their financial statements were prepared according to IFRS. By doing so, they accurately calculated their Taxable Income and avoided compliance issues during audits.
Case Study 2: Audit Requirements
Company D, a Qualifying Free Zone Person, maintained audited financial statements as required. This proactive measure helped them avoid penalties and ensured their financial records were transparent and accurate.
How Fastlane Can Help
Fastlane provides comprehensive accounting services, ensuring your financial statements are prepared according to UAE standards. Our team also assists with audits, guaranteeing compliance and peace of mind.
