UAE Directives On Maintaining Audited Financial Statements


With the UAE going through a transition from a no tax to a low tax jurisdiction, businesses based in the country now need to prepare additional annual reports to justify their business performance. In this article we discuss the need for preparing financial statements and explain the Government’s position – and business owners responsibilities. 

The Financial Statement

A taxable person’s income is to be determined on the basis of adequate, standalone financial statements prepared according to the prescribed accounting standards. In the UAE, taxable persons are expected to prepare and maintain financial statements under the corporate tax laws. All documents and records should be maintained to support the information in the tax returns or in other filings, including:

Relevant correspondence, invoices and tax invoices, licenses and agreements/contracts related to the business.

Documents containing details of any election of tax reliefs, determination or calculation made by a taxable person in relation to its tax affairs.

Documents with respect to related party transactions, wherever applicable.

The records should be preserved – physically and/or electronically – for 7 years following the end of the relevant tax period.

Audited vs Certified Financial Statements

The requirement to maintain financial statements should be distinguished from maintaining audited financial statements as the latter is applicable only in the following categories:

A taxable person having revenue over Dh50 million (about US$13.6 million) in a tax period.

A Qualifying Free Zone Person (QFZP).

The earlier FAQs suggested that the specified persons could prepare and maintain ‘audited or certified’ financial statements. The updated FAQs, post the relevant ministerial decision, have clarified that it is not allowed to substitute audited financial statements with ‘certified’ financial statements.

The financial statements must be audited by a registered auditor pursuant to federal law 12/2014 and ministerial resolution 403/2015.


There is currently no obligation, or option, to prepare certified financial statements. The obligation to prepare audited financial statements, wherever applicable, under any other existing legislations has not been altered by the corporate tax laws. Even if a company is not required to maintain audited financial statements under the corporate tax laws, it may still be obliged to maintain the same if required under any other existing legislations such as the relevant free zone legislations.

The financial statements – audited or unaudited – may be asked by the Federal Tax Authority (FTA) in the prescribed form and manner.

Consolidated Financial Statements

When taking into account previous practice, business accountants ask if a consolidated financial statements covering more than one company could be maintained for corporate tax purposes. Does each company require a stand-alone financial statement?

It has been reaffirmed that – except in the case of a ‘Tax Group’ – each UAE entity will need to prepare and maintain stand-alone financial statements. If a Tax Group’s revenue exceeds Dh50 million (about US$13.6 million) in a tax period, their financial statements will need to be audited, as prescribed.

Currency Conversion Standards

For UAE corporate tax purposes, all amounts – income, expenses, deductions and credits – must be measured in UAE Dirhams. Income and expenses in any foreign currencies need to be converted into Dirhams.

The conversion should be based on the applicable exchange rate – set by the Central Bank of the UAE – at the time the foreign currency transaction is to be translated into UAE Dirhams.

Typically, UAE taxpayers are expected to translate amounts denominated in a foreign currency on a transaction-by-transaction basis. However, this compliance requirement may need further clarification. The FTA will prescribe the method under which the conversion is to be undertaken.

Like other tax regimes, corporate tax is also a self-assessment regime. Well maintained financial records, documents and records would ensure that tax compliance and future assessments are up to date and comprehensive. Sorting out untidy accounts later is only more expensive and time consuming when it comes to your audit requirements.

Dezan Shira & Associates assist foreign investors in Asia and have an office in Dubai. For assistance with accounting and related tax and operational compliance in the UAE please contact us at or see our 2023 Doing Business in Dubai guide below.

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Middle East Briefing is produced by Dezan Shira & Associates. We provide foreign investment market intelligence about doing business in the region as well as provide updates on investments into Asia for Middle eastern based international companies from our offices in Dubai. Our firm was established in 1992 and has 28 offices and several hundred research, legal, tax and compliance professionals in our offices through the Asian region.

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