FTA Decision No. 7 of 2025 – New Requirements for Audited Special Purpose Financial Statements for UAE Tax Groups
Overview
On July 16, 2025, the Federal Tax Authority (FTA) released Decision No. 7 of 2025, introducing specific requirements for the preparation and maintenance of Audited Special Purpose Financial Statements by Tax Groups in the UAE.
This decision aligns with Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses and is effective for tax periods beginning on or after January 1, 2025.
Objective
The decision aims to ensure that Tax Groups compile audited financial statements in a transparent, consistent, and standardized manner, in line with:
- International accounting and auditing standards
- UAE Corporate Tax law requirements
Key Definitions
The ruling introduces the concept of Aggregated Financial Statements, which:
- Combine the separate financial statements of the parent company and its subsidiaries
- Follow a structured format
- Are not equivalent to consolidated financial statements (i.e., no consolidation adjustments)
Preparation & Submission Requirements
Tax Groups must:
- Prepare financial statements in accordance with International Standards on Auditing (ISA)
- Submit audited aggregated financial statements to the FTA within nine (9) months of the end of the relevant tax period (unless otherwise instructed)
Framework for Aggregated Financial Statements
The following key principles must be followed:
- Eliminate all intercompany transactions
- Use IFRS or IFRS for SMEs
- Exclude adjustments for:
- Goodwill
- Bargain purchases
- Fair value remeasurements
(except in cases where combinations do not involve acquiring a separate legal entity)
- Apply consistent accounting policies across all group members
- Present in UAE Dirhams (AED)
- Record investments in entities outside the tax group at cost less impairment
Required Financial Statements & Disclosures
Statements:
- Aggregated Statement of Financial Position
- Aggregated Statement of Profit or Loss
- Aggregated Statement of Other Comprehensive Income
- Aggregated Statement of Changes in Equity
Disclosures:
- Accounting framework used
- Basis of aggregation
- Key accounting policies, estimates, and judgments
- Explanatory notes supporting financial data
Exit of a Tax Group Member
If a member exits the Tax Group:
- It must adopt the asset and liability values previously recorded by the group as opening balances in its standalone financial statements.
- If accounting standards prohibit this, taxable income must still be calculated as if these values were used.
Access the Full Decision
You can access the full text of FTA Decision No. 7 of 2025 via the official FTA website:
Disclaimer
This update is provided for information purposes only and does not constitute legal or tax advice. Businesses potentially affected by these changes should seek advice from qualified professionals or consult the Federal Tax Authority (FTA) for official guidance.
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