As businesses prepare for their first Corporate Tax returns, one question comes up often: do we need an audit? Under Ministerial Decision No. 82 of 2023, some taxpayers must prepare and maintain audited financial statements to support their Corporate Tax position.
Who must have audited financial statements
Two groups are covered:
- Taxable persons with revenue exceeding AED 50 million in the relevant tax period; and
- Qualifying Free Zone Persons, regardless of their revenue.
Many other businesses already need audited accounts for other reasons, such as free zone licence renewals, banking facilities or their own constitutional documents, so the practical impact is wider than the decision alone suggests.
Why it matters for free zone businesses
For a Qualifying Free Zone Person, audited financial statements are one of the conditions for keeping the 0% rate on qualifying income. Missing the audit is not just a compliance gap: it can put the free zone benefit itself at risk.
Planning the audit around the return
The Corporate Tax return is due nine months after the end of the tax period. The audit needs to be finished in good time before that, so the return can be prepared from final, audited figures. A practical timetable might look like this:
- Months 1 to 2 after year-end: close the books, reconcile balances, prepare draft financial statements.
- Months 3 to 5: audit fieldwork and finalisation.
- Months 6 to 8: prepare and review the Corporate Tax return.
- Month 9: file and pay.
Getting audit-ready
The quickest audits are those where the records are ready: bank reconciliations complete, balances supported, inventory counted and related party transactions documented. Preparation, rather than the audit itself, is usually what determines how long it takes.
If you are unsure whether you need an audit, or want to plan your audit around your Corporate Tax return, please get in touch.
This article is general information based on the rules as we understand them at the date of publication. It is not advice on your circumstances. Laws and practice change, so please speak to us before acting on it.
