Aggregate Financial Statements & Audit Requirements for UAE Tax Groups

Last updated: 1 September 2025

The introduction of the UAE Corporate Tax Law (Federal Decree-Law No. 47 of 2022) has transformed financial reporting for businesses operating in the Emirates. One of the most significant changes is the requirement for Tax Groups to prepare and maintain Aggregated Financial Statements UAE (AFS). Starting from 1 January 2025, audited AFS will be mandatory for all tax groups, regardless of revenue thresholds.

As a leading audit firm in Dubai, Saif Chartered Accountants breaks down what UAE businesses need to know about aggregated financial reporting, audit compliance, and the steps to avoid penalties from the Federal Tax Authority (FTA).

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Understanding Tax Groups under UAE Corporate Tax

A Tax Group is formed when a parent company and its subsidiaries are treated as a single taxable person. This arrangement simplifies Corporate Tax filings by consolidating group activities into one return, but it comes with specific conditions:

• The parent company must own at least 95% of the share capital of its subsidiaries (directly or indirectly).
• The parent company must hold at least 95% of voting rights in the subsidiaries.
• The parent company must be entitled to at least 95% of profits and net assets of the subsidiaries.
• Neither the parent company nor subsidiaries can be Exempt Persons or Qualifying Free Zone Persons.
• All entities must follow the same financial year and accounting standards.

Once approved by the FTA, the Tax Group is recognized as a single taxable person. This means all members are jointly and severally liable for Corporate Tax liabilities. For detailed advisory on eligibility and applications, see our Corporate Tax Impact Assessment UAE page.

What Are Aggregated Financial Statements (AFS)?

Aggregated Financial Statements are a special-purpose framework used to determine the taxable income of a Tax Group. Unlike IFRS consolidated financials, which focus on investor transparency, AFS exist purely for corporate tax compliance.

• They are prepared by aggregating standalone financial statements of group members.
• Intra-group transactions (sales, loans, provisions) are eliminated.
• Reports must be presented in AED using uniform accounting policies.
• They may deviate from IFRS (e.g., goodwill and fair value adjustments are not included).

The main statements included in AFS are:

• Aggregated statement of financial position
• Aggregated statement of profit or loss
• Aggregated statement of other comprehensive income
• Aggregated statement of changes in equity

For example, if Company A loans AED 100m to Company B within the Tax Group, and later records a provision against the receivable, the gain or loss would be eliminated in the AFS to avoid inflating taxable income. These eliminations are crucial to ensure accuracy when calculating the group’s Corporate Tax liability.

How AFS Differ from Consolidated Financial Statements

While both consolidated financial statements and AFS combine multiple entities, the objectives and treatments differ:

• Consolidated FS: Prepared under IFRS/IFRS for SMEs; includes purchase accounting, goodwill, fair value adjustments, etc.
• AFS: Prepared only for tax; excludes goodwill and fair value adjustments; focuses on eliminating intra-group transactions.
• Consolidated FS: Used for shareholders, regulators, and financial reporting.
• AFS: Used only for FTA compliance with Corporate Tax law.

This distinction ensures businesses don’t double-count or misstate taxable income. To see how this aligns with compliance, refer to FTA Decision No. 7 of 2025.

Audit Requirements for Tax Groups

Audit obligations for Tax Groups depend on the tax period:

• Before 1 January 2025: AFS audit was required only if group revenue exceeded AED 50 million, or if the group included a Qualifying Free Zone Person (per Ministerial Decision No. 82 of 2023).
• From 1 January 2025 onwards: All Tax Groups must prepare audited AFS under a special-purpose framework, regardless of revenue (per Ministerial Decision No. 84 of 2025 and FTA Decision No. 7 of 2025).

Audits must be carried out in accordance with International Standards on Auditing (ISA), and the auditor’s report is restricted for submission to the FTA. This ensures that the FTA receives reliable, independently verified financial information for Corporate Tax assessment.

Submission Deadlines

The audited AFS must be submitted to the FTA together with the Corporate Tax Return. The deadline is within nine (9) months from the end of the relevant Tax Period, unless the FTA specifies otherwise.

For example, if a Tax Group’s financial year ends on 31 December 2025, the audited AFS and Corporate Tax Return must be filed by 30 September 2026.

When a Subsidiary Leaves the Tax Group

If a member company exits the group, it must:

• Continue preparing standalone FS using the same accounting policies applied by the Tax Group.
• Adopt the Tax Group’s carrying values of assets and liabilities as opening balances.
• Calculate taxable income consistently with past treatment, even if IFRS does not normally allow it.

This prevents mismatches and ensures continuity in Corporate Tax compliance. For more, see our detailed guide on Annual Audit in Dubai.

Implications for UAE Businesses

For many groups, the move to AFS is more than just a reporting exercise. It requires:

• Alignment of policies: All subsidiaries must follow uniform accounting policies.
• Early planning: Groups should prepare eliminations and reconciliations well in advance of filing deadlines.
• Audit readiness: Documentation and supporting evidence must be audit-ready.
• Free Zone considerations: Groups with members in Dubai Free Zones (DMCC, JAFZA, IFZA, SAIF Zone, etc.) must ensure compliance across multiple jurisdictions.

Partnering with the right Dubai auditors can mean the difference between smooth compliance and costly penalties.

How Saif Chartered Accountants Supports Tax Groups

With decades of experience in statutory audits, tax advisory, and compliance across the UAE, Saif Chartered Accountants provides:

• Preparation of Aggregated Financial Statements
• Special-purpose audits under ISA
• Corporate Tax Impact Assessments
• VAT & Tax Filing Services
• Free Zone audit services across DMCC, DAFZA, JAFZA, Dubai South, IFZA, SAIF Zone, and more

👉 Book a consultation with our Dubai CA team to ensure your group is fully compliant with UAE Corporate Tax law.

FAQs on Aggregated Financial Statements & Tax Groups

We’ve compiled common questions from UAE businesses about AFS and audits:

1. Is every Tax Group required to prepare AFS?

Yes. From 1 June 2023 onwards, every approved Tax Group must prepare AFS. From 1 January 2025 onwards, these AFS must also be audited and submitted with the Corporate Tax Return.

2. Are AFS different from consolidated financials?

Yes. AFS are special-purpose statements used for Corporate Tax only. They may deviate from IFRS (e.g., excluding goodwill, fair value adjustments, and business combination effects).

3. What happens if audited AFS are not filed on time?

Failure to submit audited AFS with the Corporate Tax Return may result in FTA penalties and increased scrutiny during audits or inspections.

4. Do Free Zone companies forming tax groups also need AFS?

Yes. All Tax Groups, whether in mainland UAE or Free Zones, must prepare and file AFS. Free Zone companies may also face additional requirements depending on their licensing authority.

5. Do individual subsidiaries need audited standalone FS?

No. Members of a Tax Group are not required to maintain audited standalone FS solely for Corporate Tax purposes, even if their revenues exceed AED 50m. The obligation applies to the group as a whole.

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Conclusion

The UAE’s Corporate Tax regime has introduced new reporting obligations that demand precision, consistency, and independent verification. With audited Aggregated Financial Statements becoming mandatory from 2025, Tax Groups must act now to align policies, prepare eliminations, and engage approved audit firms in Dubai.

At Saif Chartered Accountants, we provide end-to-end Corporate Tax compliance services, ensuring businesses remain ahead of FTA deadlines and requirements. Contact us today for expert guidance tailored to your group structure.