On 16 July 2025, the Federal Tax Authority (FTA) issued Decision No. 7 of 2025, introducing detailed requirements for the preparation and maintenance of audited special purpose financial statements for tax groups. This decision applies to tax periods commencing on or after 1 January 2025 and is aligned with Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses.
Objective of the Decision
The primary goal of Decision No. 7 of 2025 is to ensure that Tax Groups prepare Audited Special Purpose Financial Statements in a consistent and transparent manner, meeting international auditing and accounting standards, while aligning with corporate tax law requirements.
Key Definitions
The decision introduces the concept of Aggregated Financial Statements, which are prepared by combining the standalone financial statements of the Parent Company and each Subsidiary in the tax group, based on a defined framework.
These statements differ from consolidated statements as they focus on aggregation without certain consolidation adjustments.
Core Requirements
- Preparation of Aggregated Financial Statements
- Tax Groups must prepare statements by aggregating financial statements.
- The statements must be audited in accordance with relevant International Standards on Auditing (ISA).
- Timelines
- The audited aggregated financial statements must be submitted to the FTA within nine (9) months from the end of the relevant tax period, unless otherwise directed.
Framework for Preparation
The framework mandates:
- All intercompany transactions within the group must be eliminated.
- Compliance with International Financial Reporting Standards (IFRS) or IFRS for SMEs.
- Exclusion of adjustments for goodwill, bargain purchases, or fair value remeasurements arising from business combinations — except in cases where combinations occur without acquiring a separate legal entity.
- Uniform accounting policies across all group members.
- Presentation in UAE Dirhams.
- Investments in entities outside the tax group to be recorded at cost less impairment.
Statement and Disclosure Requirements
- Statements to Include
- Aggregated Statement of Financial Position.
- Aggregated Statement of Profit or Loss.
- Aggregated Statement of Other Comprehensive Income.
- Aggregated Statement of Changes in Equity.
- Mandatory Disclosures
- The accounting framework used.
- Basis of aggregation.
- Material accounting policies, estimates, and judgments.
- Supporting explanatory notes for figures.
Treatment of Members Leaving the Tax Group
When a member exits the tax group:
- The exiting member must adopt asset and liability values recorded by the tax group as opening balances in its standalone financial statements.
- If accounting standards prohibit such adoption, taxable income must still be computed as though the values were applied.
Conclusion
FTA Decision No. 7 of 2025 represents a significant step toward standardized and transparent financial reporting for tax groups in the UAE. By mandating audited aggregated statements under a well-defined framework, the FTA aims to ensure accuracy, comparability, and integrity of tax-related financial disclosures.
For tax groups, early preparation and alignment of accounting policies will be crucial to meet the new compliance requirements efficiently.
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RVG provides expert corporate tax and audit support to help businesses comply with UAE regulations, including the new FTA Decision No. 7 of 2025. We assist tax groups in preparing IFRS-compliant aggregated financial statements, aligning accounting policies, eliminating intra-group transactions, ensuring accurate disclosures, and meeting submission deadlines. Our focus is on compliance, accuracy, and efficiency in financial reporting.
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