Businesses which are part of tax groups need to be vigilant now, as the UAE has issued new rules for how tax groups must prepare and submit their audited financial statements. The aim is to create a single, clear system for all tax groups. Knowing these requirements is the only way to avoid costly errors and meet deadlines.
Tax Gian helps you stay in line with the ever-changing tax regulations in the UAE. Our corporate tax agents in the UAE help you streamline your tax processes.
Who Must Follow These Rules
- The new requirements apply to all tax groups under the UAE Corporate Tax Law.
- They take effect for tax periods starting on or after 1 January 2025.
- If your business is part of a tax group, you will need to prepare Aggregated Financial Statements and have them audited.
What Are Aggregated Financial Statements?
Aggregated Financial Statements combine the standalone financial statements of the parent company and each subsidiary in the tax group. They are not the same as consolidated statements. Instead of showing the group as one company, they sum up the financial data from each member, following special rules for eliminations and adjustments.
Main Requirements
Under the new decision, a tax group must:
- Prepare Aggregated Financial Statements each taxable year.
- Follow the preparation rules in Article 3 of the decision.
- Have the statements audited under International Standards on Auditing (ISA).
- Submit the audited statements to the Federal Tax Authority (FTA) within 9 months after the end of the tax period, unless the FTA sets another date.
How the Statements Must Be Prepared
The following considerations are important for preparing statements. Corporate tax agents in Dubai can also help you prepare your statements according to the new rules.
- Base Data
- Use each member’s standalone financial statements for the same financial year.
- The statements must follow IFRS or IFRS for SMEs.
- Eliminations
- Remove all income, expenses, unrealised gains or losses, and other transactions between tax group members.
- Do not remove transactions with companies outside the tax group.
- Special Rules for Business Combinations
- Exclude adjustments such as goodwill, gains on bargain purchases, and fair value changes in aggregated financial statements when a separate legal entity is acquired.
- In that case, the assets, liabilities, and goodwill are included fully.
- Investments and Impairments
- Do not eliminate impairments that the parent records against its investment in a subsidiary.
- Do not eliminate impairments recorded by a subsidiary on its investment in another subsidiary.
- Uniform Policies
- All members must use the same accounting policies before aggregation.
- Currency
- Present all amounts in United Arab Emirates Dirham (AED).
Statements to Be Included
A complete set of Aggregated Financial Statements must contain:
- Aggregated Statement of Financial Position
- Aggregated Statement of Profit or Loss
- Aggregated Statement of Other Comprehensive Income
- Aggregated Statement of Changes in Equity
Required Disclosures
Along with the statements, the tax group must provide disclosures that explain how the figures were prepared. These include:
- The preparation framework used.
- The basis of aggregation.
- The accounting policies, estimates, and judgments applied.
- Any notes that support and explain the figures in the statements.
Handling Members Leaving the Tax Group
When a company leaves the tax group, or if the group is dissolved:
- The company must use the same asset and liability values recorded in the tax group as its opening balances.
- If accounting standards do not allow this, the company must still calculate its taxable income as if it had used these values.
Why These Rules Matter
The new system removes confusion and sets a single standard for all tax groups.
If followed correctly, it ensures:
- Compliance with corporate tax law.
- Accuracy in tax reporting.
- Reduced risk of penalties.
On the other hand, missing deadlines, skipping eliminations, or failing to disclose details can result in extra tax bills, fines, or rejection of filings. You can take assistance from corporate tax agents in the UAE to avoid such circumstances.
Practical Tips for Compliance
- Start preparing early; waiting until the end of the tax period will make it hard to meet the 9-month deadline.
- Train your accounting team on the differences between aggregated and consolidated statements.
- Keep a checklist of elimination rules and disclosure items.
- Maintain consistent accounting policies across all members of the tax group.
- Book your auditor well before the deadline to avoid delays.
- Take expert assistance from corporate tax agents in the UAE to stay ahead of the curve.
How can Tax Gian Help?
Businesses that adapt early and follow the requirements will have smoother audits and fewer compliance risks. Tax Gian can help you understand the new requirements and implement the changes accordingly. Our expert agents can help you prepare your financial statements under the latest rules. We help you comply and always stay ahead.
