Audited Financial Statements and Corporate Tax in UAE

1. Corporate Tax Law

Requirement Under Federal Decree-Law No. 47 of 2022 (Corporate Tax Law):

• Every Taxable Person must prepare and maintain financial statements, but audited financials are not always mandatory.

• As per Clause 2 of Article 54, audited financial statements are required for:

  • Taxable persons with revenue exceeding AED 50 million in a tax period.

  • Qualifying Free Zone Persons (QFZPs).

2. Free Zone Persons

• QFZPs must maintain audited financial statements to enjoy the 0% CT rate on qualifying income.

• If a Free Zone Person does not qualify (or opts out), it will be taxed at 9%, and audit is not required under CT law, but may still be required by the Free Zone Authority.

3. Small Business Relief (SBR)

• Entities electing for SBR (revenue ≤ AED 3 million until 31 Dec 2026) are not required to have audited financials under CT law.

• They must, however, keep proper accounting records to prove eligibility.

4. Mainland Companies

• Corporate Tax law does not mandate audits for mainland entities.

• But under the UAE Commercial Companies Law, most LLCs and PJSCs must prepare annual audited financial statements, often required for DED license renewal.

Key Summary

• QFZPs → Audit mandatory (to claim 0% CT).

• Taxable persons with turnover > AED 50M → Audit mandatory.

• Non-QFZP / Mainland → Audit not required under CT law but may be required under CCL or Free Zone rules.

In practice → Most Free Zone and larger companies already undergo audits for license renewal, financing, and compliance.

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