Federal Tax Authority Decision No. 7 of 2025

Special Purpose Audited Financial Statements for Tax Groups

The UAE Federal Tax Authority (FTA) issued Decision No. 7 of 2025, which is effective for tax periods commencing on or after 1 January 2025. This decision mandates the preparation and maintenance of Audited Special Purpose Financial Statements (SPFS) for tax groups under the UAE Corporate Tax Law.

Purpose and Importance

The decision aims to establish a consistent, transparent, and standardized framework for tax groups to prepare their financial statements. This enhances the accuracy, comparability, and integrity of financial disclosures made for corporate tax purposes in the UAE.

Key Definitions

Aggregated Financial Statements: These are financial statements prepared by aggregating the standalone financial statements of the parent company and each subsidiary within the tax group. Unlike consolidated financial statements, certain consolidation adjustments such as goodwill, bargain purchase, and fair value adjustments are excluded.

Main Requirements

Requirement	Details
Audited Aggregated Financial Statements	Must be prepared annually for tax periods starting on or after 1 January 2025, irrespective of the revenue of the Tax Group.
Aggregation Scope	Combines standalone accounts of each tax group member, eliminating intra-group transactions
Compliance Standards	Must comply with IFRS or IFRS for SMEs
Financial Statements Components	A complete set of statements as specified under the Accounting Standards applied by the Taxable Person, which includes, but is not limited to, statement of income, statement of other comprehensive income, balance sheet and statement of changes in equity.
Currency	Financial statements must be presented in AED
Uniformity	Use uniform accounting policies across all tax group members
Members Leaving the Tax Group	When a member leaves the group, asset and liability values from aggregated accounts to be adopted as opening balance in standalone financial statements for tax reporting

Key Focus Areas:-

Businesses that have formed Tax groups for Corporate Tax purpose should consider the audit requirements as the same is now mandatory irrespective of the revenue of the Tax Group.

Early preparation is advised due to the tax filing deadlines, meaning groups should initiate preparations for the 2025 results immediately upon close of the financial year so that the aggregated financial statements can be prepared once the standalone financial statements are prepared and tax compliance due dates are duly met.

It is also important for auditors to carefully assess the implications of the this decision and prepare the financial statements in alignment with the guidelines provided under the decision.

This new regulatory framework significantly impacts the corporate tax compliance landscape in the UAE by requiring tax groups to adopt a uniform process for audited financial reporting to the FTA.

For companies involved in tax groups, it is crucial to promptly align accounting policies, systems, and audit processes to meet these new requirements efficiently and avoid penalties.

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