Aug 16, 2025 
Corporate Tax
FTA’s Decision on Audited Special Purpose Financial Statements for Tax Groups
On 16 July 2025, the Federal Tax Authority (FTA) issued Decision No. 7 of 2025, outlining the requirements for preparing and maintaining Audited Special Purpose Financial Statements for Tax Groups under Federal Decree-Law No. 47 of 2022 on Corporate Tax. The decision applies to tax periods starting on or after 1 January 2025.
Key Highlights:
1. Mandatory Aggregated Financial Statements
- Tax Groups must prepare Aggregated Financial Statements (Special Purpose Financial Statements) by combining the standalone financial statements of the parent and all subsidiaries in the group, eliminating intra-group transactions.
- Statements must follow IFRS or IFRS for SMEs, with certain exceptions regarding goodwill, fair value adjustments, and business combinations.
2. Audit & Submission Deadlines
- Aggregated Financial Statements must be audited in line with International Standards on Auditing (ISA).
- Submission to the FTA is required within 9 months from the end of the relevant tax period (unless otherwise specified).
3. Preparation Framework
- Uniform accounting policies must be applied across the group.
- Financial statements must be presented in UAE Dirhams (AED).
- Only pre-tax profits or losses are aggregated.
- Investments outside the Tax Group are recorded at cost less impairment.
- Intra Tax group Balances, Incomes, expenses and unrealized gains/losses on
transfers within the group should be eliminated. - Business combination accounting under IFRS 3 and related consolidation
adjustments under IFRS 10 are excluded from Aggregated Financial Statements,
except where the transaction does not involve acquiring a separate legal entity.
In such cases, related assets, liabilities, and goodwill are fully included. - Adjustments for goodwill, bargain purchase gains, or fair value remeasurements
from consolidated accounts are not recorded in Aggregated Financial
Statements. - A line-by-line aggregation of each financial statement item is required, without
eliminating investments and related equity between members. - Impairments recorded by the parent or a subsidiary on investments in other Tax
Group members are not eliminated.
4. How is Aggregated FS different from CFS as per IFRS 10?
| Area | IFRS 10 (CFS) | Aggregated FS (UAE Tax Group) | Key Difference |
|---|---|---|---|
| Basis of Preparation | Full consolidation under IFRS 10 using control concept. | Line-by-line aggregation of individual FS, no consolidation of investments/equity. | Aggregation method is not true consolidation. |
| Treatment of Investments in Group Members | Investments in subsidiaries are eliminated against the parent’s equity interest. | Investments in tax group members are kept at cost less impairment. | Investments are not eliminated in Aggregated FS. |
| Goodwill / Bargain Purchase Gains / Fair Value Adjustments | Recognised as per IFRS 3 on acquisition. | Not recognised (except when acquiring assets/liabilities directly without separate legal entity). | No goodwill or FV adjustments in most cases. |
| Elimination of Intra-group Transactions | All intra-group balances, transactions, income, expenses, and unrealised profits/losses are eliminated. | Only intra-tax group balances, incomes, expenses, and unrealised gains/losses are eliminated. | Elimination scope is narrower in Aggregated FS. |
| Parent/Subsidiary Impairments on Investments in Group Entities | Eliminated as part of investment elimination process. | Impairments are not eliminated. | Leads to different net asset values. |
| Currency Presentation | Any presentation currency selected by the group. | Must be presented in UAE Dirhams (AED). | Currency fixed to AED for Aggregated FS. |
| Business Combination Accounting (IFRS 3) | Fully applied for all acquisitions within scope. | Excluded, except when no separate legal entity is acquired and assets/liabilities are directly recognised. | Business combination rules mostly bypassed. |
| Equity Between Group Entities | Eliminated in consolidation. | Not eliminated in aggregation. | Results in duplication of equity in totals. |
5. Required Statements & Disclosures
A complete set must include:
- Aggregated statement of financial position
- Aggregated statement of profit or loss
- Aggregated statement of other comprehensive income
- Aggregated statement of changes in equity
Disclosures should explain:
- The preparation framework
- Basis of aggregation
- Significant accounting policies and judgments
- Supporting explanatory notes
6. Rules for Members Leaving a Tax Group
- Departing members must adopt asset and liability values recorded by the Tax Group as their opening balances, unless accounting standards prohibit it. In those cases, tax calculations should assume such values could be used.
Effective Date: This decision is enforceable for tax periods starting 1 January 2025 and will be published in the Official Gazette.
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