UAE CT requires financial statements as the basis for the CT return — prepared on IFRS or IFRS for SMEs. Free zone companies must submit audited financial statements to their authority annually. Mainland LLCs must maintain IFRS-basis accounts but are not required to audit unless the company law or their MOA requires it. Individuals with revenue under AED 3 million may use cash basis.
Components of UAE financial statements
- Statement of Financial Position (Balance Sheet): Assets (current and non-current), liabilities (current and non-current), and equity at a point in time. The foundation for CT taxable income calculations.
- Statement of Profit or Loss (Income Statement): Revenue, cost of sales, gross profit, operating expenses, EBITDA, depreciation, EBIT, finance costs, and net profit. The starting point for the CT return.
- Statement of Cash Flows: Operating, investing, and financing cash flows. Required under full IFRS; recommended for IFRS for SMEs.
- Statement of Changes in Equity: Opening equity, profit for the period, dividends paid, and closing equity. Required under full IFRS.
- Notes to the financial statements: Accounting policies, significant judgements, related party transactions, contingent liabilities, and segment information. Critical for CT compliance — transfer pricing disclosures and related party notes are scrutinised by the FTA.
Financial statement requirements by business type
| Business type | Standard required | Audit required? | Submitted to |
|---|---|---|---|
| Mainland LLC | IFRS or IFRS for SMEs | Not mandated by Companies Law unless MOA requires it | Ministry of Economy (on request); FTA (CT return basis) |
| Free zone company (non-QFZP) | IFRS or IFRS for SMEs | Yes — annual submission to free zone authority | Free zone authority + FTA (CT return basis) |
| QFZP (Qualifying Free Zone Person) | IFRS | Yes — mandatory for QFZP status | Free zone authority + FTA |
| Branch of foreign company | IFRS (parent standard) | Varies — depends on parent and free zone | Free zone authority |
| Natural person (business) | IFRS or cash basis (if revenue < AED 3M) | No | FTA (CT return only) |
| UAE Listed company | Full IFRS | Yes — mandatory | SCA + stock exchange |
IFRS vs IFRS for SMEs — which one applies?
Full IFRS and IFRS for SMEs both produce comparable financial statements. The key differences:
- Full IFRS: Required for listed entities, QFZPs, and companies with public accountability. More complex — lease accounting (IFRS 16), revenue recognition (IFRS 15), and financial instruments (IFRS 9) add compliance burden.
- IFRS for SMEs: A simplified, self-contained standard for private companies without public accountability. Suitable for most UAE mainland LLCs and private free zone companies. Easier lease and financial instrument treatment.
- CT Law position: The FTA accepts both IFRS and IFRS for SMEs as the basis for financial statements. Taxable persons may also use another recognised accounting standard if approved by the FTA — but IFRS or IFRS for SMEs is the safe default.
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We prepare full financial statements (balance sheet, P&L, notes) for UAE CT filing and free zone submission. Annual fixed fee.
Frequently asked questions
Are UAE mainland LLCs required to have an audit?+
UAE Companies Law (Federal Decree-Law 32/2021) requires LLCs to appoint an auditor, but does not mandate a statutory filed audit in the same way as some other jurisdictions. However, LLCs must maintain proper accounts, and the FTA may request financial statements during a CT audit. Many LLCs get audited for practical and investor relations reasons.
What accounting standard must UAE free zone companies use?+
IFRS or IFRS for SMEs — most free zone authorities specify IFRS in their regulations. QFZPs must use IFRS (not IFRS for SMEs) and must produce audited financial statements to maintain qualifying status.
When must free zone companies submit their audited financial statements?+
Typically within 3–9 months of the financial year end, depending on the free zone. DAFZA requires within 4 months; DMCC within 6 months; ADGM within 6 months. Check your free zone authority’s specific requirement — penalties apply for late submission.
Does the FTA require UAE businesses to file financial statements?+
Not as a standalone submission — but financial statements are the basis for the CT return, and the FTA can request them during an audit. Taxable persons with revenue exceeding AED 50 million in a tax period must submit audited financial statements with their CT return.
What is the difference between IFRS and IFRS for SMEs for UAE businesses?+
Full IFRS is more complex — it includes detailed standards for leases (IFRS 16), revenue (IFRS 15), and financial instruments (IFRS 9). IFRS for SMEs simplifies these — leases are simpler, all financial instruments at amortised cost or fair value through P&L. For most UAE private companies, IFRS for SMEs is sufficient and significantly less burden.