Preparing audited financial statements for a UAE tax group is already a complex job. But the real problems start when small mistakes slip into the process. A single missed disclosure or a wrong elimination can lead to questions, rejections, or tax miscalculations. Businesses often find these mistakes only when it’s too late, during an audit or after submission.
The new rules (Cabinet Decision no. 7 of 2025) give tax groups a straightforward method to follow. But understanding where others have gone wrong is the fastest way to avoid trouble. Here are the most common compliance pitfalls and how to steer clear of them.
Tax Gian has professional corporate tax agents in the UAE who are devoted to helping businesses comply with CT rules.
- Incorrect Eliminations
Not all intra-group items should be treated the same way. You must remove income, expenses, unrealised gains or losses, and other transactions between tax group members.
But there are two cases where eliminations are not allowed:
- Impairments recorded by the parent against a subsidiary.
- Impairments recorded by a subsidiary against another subsidiary.
Removing these by mistake changes the taxable income and risks non-compliance.
- Poor Handling of Business Combinations
Business combinations require careful treatment. Goodwill, gain on bargain purchase, and fair value adjustments from consolidated accounts must usually be excluded from aggregated statements.
The only exception is when there was no acquisition of a separate legal entity. In that case, you must include all related assets, liabilities, and goodwill. Confusing these rules can cause major errors in the final figures. It’s better to take help from corporate tax agents in the UAE.
- Weak or Missing Disclosures
The statements themselves are not enough; proper disclosures are mandatory.
Common mistakes include:
- Failing to state the preparation framework.
- Not explaining the basis of aggregation.
- Leaving out accounting policies, estimates, or judgments.
- Providing no supporting notes for figures.
Without these, the Federal Tax Authority (FTA) may reject the application or request further documentation if the statements are not well supported.
- Non-uniform Accounting Policies
Each member of the tax group must use the same accounting policies before aggregation. If different policies are applied, the combined figures may be misleading. Failure to standardise policies before aggregation is a common error and can result in inaccurate reporting.
- Mismanagement When Members Leave the Tax Group
When a member leaves or the group is no more:
- The (leaving) company must use the values of liabilities and assets from the tax group as its ‘opening balances’.
- If accounting standards do not allow this,adjustments must be made for tax purposes to ensure taxable income is appropriately calculated.
Applying the wrong method can cause problems, and tax authorities can raise questions.
- Late Submission
The audited aggregated statements must be submitted to the FTA within 9 months after the end of the tax period (unless a different date is set). Late submissions are one of the most avoidable pitfalls. They usually happen because audits take longer than expected, so scheduling early is essential.
How to Avoid These Pitfalls
- Create a compliance checklist covering eliminations, disclosures, and member changes.
- Document all intra-group transactions during the year so eliminations are easy to track.
- Review business combination entries carefully to confirm which adjustments should be included.
- Check disclosures twice before submission to ensure nothing is missing.
- Standardise accounting policies across all members early in the year.
- Plan the audit timeline so there’s enough buffer before the submission deadline.
- Keep group membership records updated so you don’t miss out on anything.
- Hire corporate tax agents in Dubai to avail proper support in tax matters and reduce the chances of errors.
Why Compliance is Worth the Effort
- The consequences for mistakes can be more expensive than the time saved by cutting corners.
- Correct eliminations prevent overstating or understating income.
- Proper disclosures help auditors and the FTA understand the figures without delay.
- Accurate handling of member changes ensures the tax position is correct.
By avoiding these pitfalls, tax groups can submit their audited aggregated statements with confidence, knowing they have met all the requirements.
Why Choose Tax Gian?
Tax Gian is equipped with qualified field experts who can help tax groups comply with the new financial reporting rules. Whether in a tax group or not, your business can streamline its tax matters with the help of our CT agents. We make sure that you always comply with tax regulations in the UAE, file correctly, and handle tax matters without failing.
