The UAE Federal Tax Authority (FTA) has released Public Clarification CTP007, which explains how Tax Groups should prepare and audit their financial statements under the Corporate Tax Law.
What’s a Tax Group?
A Tax Group is when two or more related companies are approved by the FTA to be treated as a single taxable person. This allows them to file a single corporate tax return instead of multiple separate ones.
Key Updates from the FTA
- Special Purpose Aggregated Financial Statements (AFS):
Tax Groups must prepare AFS by combining the standalone financials of all members. These are not the same as IFRS consolidated accounts — they follow a special framework created for tax reporting.
- Audit Requirement:
- Until 31 Dec 2024 → only groups with revenue above AED 50 million must have audited financials.
- From 1 Jan 2025 → all Tax Groups must prepare and submit audited AFS, regardless of revenue.
- Consistency Rules:
All group members must use the same accounting policies, financial year, and AED currency reporting. Intra-group transactions must be eliminated to avoid duplication.
- Exiting Members:
If a company leaves the Tax Group, its standalone accounts must follow the same policies and opening balances used in the group.
Why This Matters for Businesses
- Companies in Tax Groups must plan for audits — even if they previously did not meet the revenue threshold.
- From 2025, an audit will be mandatory for all groups, requiring additional preparation, documentation, and timelines for compliance.
- Businesses should ensure their financial systems and processes are aligned now to avoid last-minute issues at the time of filing.
Takeaway for Clients:
If your company is part of a Tax Group in the UAE, you will need to prepare and submit audited Aggregated Financial Statements with your corporate tax return. Preparing early with your audit partner will save time, cost, and stress.
