The UAE government has announced the implementation of a corporate tax on June 1st, 23. The law states that a taxable person or business will be liable to pay a 9% corporate tax beginning with their first fiscal year beginning on or after June 1, 2023. However, some need to submit a mandated financial audit statement (Report) to the tax authority meeting certain criteria.
It has created quite a stir among businesses and tax experts since its announcement. With this announcement, the UAE will become the fourth GCC country to impose a federal corporate tax.
The UAE has revised its taxation system to make it even more appealing to foreign firms and investors, whilst ensuring financial record accuracy. This is important to ensure that financial records are accurate.
Before Corporate Tax in UAE goes into effect, businesses may need to perform their audit.
Audit Firms in Dubai offer top-quality financial statement audits as well as corporate tax preparation, audit, and compliance solutions. They are knowledgeable in all aspects of corporate tax advisory services, such as entity formation, income tax filing, and consolidated reporting.
Audit Report for Corporate Tax in UAE
Under Ministerial Decision No.82 of 2023, Corporations must submit audited financial statements to ensure compliance with UAE corporate tax. An audit's purpose is to ensure that financial statements are accurate and confidential, as well as to provide transparency and accountability to investors and other stakeholders. An audit report will include remarks on accuracy and privacy.
Who should submit audited financial statements under UAE corporate tax law? Taxable Persons whose revenue exceeds 50 million Dirhams and a Qualifying Free Zone Person should Prepare Audited Financial Statements for corporate tax. The submitted report was then audited by the FTA to verify compliance with the regulations of the country.
The key points are as follows:
Financial Statement Submission: The FTA may request that a Taxable Person submit a financial statement in order to calculate Taxable Income.
Audited Financial Statements: The Minister of Finance may request that audited or certified financial statements be prepared for the above-mentioned individuals.
Financial statements to be submitted for UAE Corporate Tax
The following are the audited financial reports to be submitted to the tax authority,
- The balance sheet
- Statement of income (profit/loss)
- Statements of cash flows
- Equity statement of shareholders
Need for financial statement audit report for UAE corporate tax
- Improve business operations,
- Improve credibility and reputation
- Detect and stop fraud,
- Identify growth opportunities
Financial Statment Accounting Standards for Corporate Tax
As per the Ministerial Decision No114 of 2023, Every individual who is subjected to UAE corporate Tax must prepare Financial statements complying with the required accounting standards in UAE.
| Taxable Person Condition | Accounting Standard |
|---|---|
| Revenue exceeds 50 million Dirhams or a Qualifying Free Zone Person | International Financial Reporting Standards (IFRS) |
| Revenue Below 50 million Dirhams | International Financial Reporting Standards for SMEs (IFRS for SMEs) |
It is mandatory to follow these accounting standards on satisfying the conditions for taxable persons to prepare financial statements.
Corporate Tax Auditors in UAE
A financial statement audit is a report issued by an external auditor on a company's finances that is required for daily operations and decisions. Our auditors are excellent at auditing and preparing financial audit reports from MNCs to SMEs through tax audit services including VAT audit, Excise Tax audit, and corporate tax audit in UAE.
BMS Auditing is a Free Zone accredited audit firm and We have the best auditors to offer audit services in all Free Zones in UAE. Hence, it is obvious that we can give the best corporate tax audit in UAE Free Zones as well.
Key aspects in the preparation of CT Financial statements in UAE
- The Federal Tax Authority may request that taxpayers submit their financial statements for calculating taxable income, either alongside or separately from their corporate tax return.
- The recent Decision (No. 82) specifies that a taxpayer's financial statements must be audited by external auditors if their revenue exceeds AED 50 million during the tax period and they use a zero-rate free zone regime.
- A tax group's parent company must consolidate each subsidiary company's financial statements, with the same fiscal year and accounting standards.
- Taxpayers' financial statements must adhere to the accounting standards accepted in the UAE, the most widely used being the International Financial Reporting Standards (IFRS).
- Taxpayers should prepare financial statements for a 12-month period and calculate taxable income using the accrual principle of accounting until they qualify for the cash-based method of accounting, which can be available to certain groups of individual entrepreneurs and small businesses.
- All documents and records which support the information in the CT return must be kept for at least seven years after the completion of the relevant tax period, according to CT law.
- Financial statement auditing was previously only required in certain free zones, but with the implementation of corporate tax in the UAE, more companies may need to consider performing a yearly external audit of their financial statements.
The imposition of corporate tax in the UAE is likely to have far-reaching consequences for the way businesses function in the country. Companies should begin their corporate tax readiness evaluation with the help of a tax agent in UAE.
UAE CT(Corporate Tax) Rate
The federal corporate tax will be implemented on June 1, 2023.
According to the ministry, the UAE's corporate tax policy "will be among the most competitive in the world," with a statutory corporate tax rate of 9% for taxable income exceeding 375,000 UAE dirhams and nil for taxable revenue below that amount "to support small businesses and startups."
To prepare for the start of corporate taxation in Dubai, corporations must be acquainted with their financial statements and how they will impact their business operations in the UAE.
Corporate Tax Advisory
Businesses in the UAE must consider how corporate tax will impact their operations. Companies must ensure that they follow corporate tax law. Our Corporate tax advisors can help you navigate this and ease your company's transition to the corporate tax system.
BMS Auditing has the top tax agents and tax consultants in Dubai to offer reliable corporate tax advisory services in UAE that combines a range of services to assist businesses with corporate tax. The services includes,
- Corporate Tax Assessment
- Corporate Tax Registration
- Corporate Tax Return Filing
- Corporate Tax Accounting
- Corporate Tax Compliance
- Corporate Tax Audit
