Introduction: In the United Arab Emirates (UAE), Ministerial Decision No. 82 of 2023, issued by the Ministry of State for Financial Affairs, holds significant importance in the realm of taxation. This decision specifies the categories of taxable persons required to prepare and maintain audited financial statements in accordance with the Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. The main objective is to enhance transparency and compliance with financial reporting, and it clarifies that this decision aligns with the Federal Decree Law No. 42 of 2022, which is the Corporate Tax Law.

Understanding the Categories of Taxable Persons: The primary focus of Ministerial Decision No. 82 of 2023 is to identify the categories of taxable persons who must maintain audited financial statements. This measure ensures accuracy and compliance in financial reporting, and the following categories are subject to these requirements:

1. Taxable Persons with Revenue Exceeding AED 50 million: Any taxable person whose revenue exceeds AED 50 million during the relevant tax period is obligated to prepare and maintain audited financial statements. This ensures transparency for entities with substantial financial activities.

2. Qualifying Free Zone Persons: Free Zone entities, known as Qualifying Free Zone Persons (QFZP), are also required to maintain audited financial statements. Regardless of their gross revenue or net profits, QFZPs must adhere to the same financial reporting standards as entities operating outside the free zones. This measure ensures uniformity and consistency in financial reporting across all entities.

Importance of Maintaining Audited Financial Statements for Qualifying Free Zone Persons: For Qualifying Free Zone Persons, maintaining audited financial statements is essential to avail of the benefits of 0% tax on Qualifying Income. Regardless of their revenue or profits, QFZPs must maintain audited financial statements, as these serve as a basis for tax return filing. By complying with this requirement, businesses can benefit from favorable taxation treatment.

How BizEdge Can Assist: BizEdge boasts a team of dedicated Qualified Chartered Accountants who can help your company prepare and maintain proper bookkeeping. Our services include providing audited financial statements and professional financial advisory tailored to your company’s specific needs. With our Client Service Team’s timely assistance and support, we ensure a smooth process and address any concerns you may have.

Publication and Application of the Decision: To ensure transparency and accessibility, the decision is published, enabling taxpayers, tax professionals, and regulatory authorities to access and understand its provisions. The decision came into effect on 10th April 2023, 15 days after publication, allowing ample time for affected parties to familiarize themselves with the requirements and ensure compliance.

Conclusion: Compliance with Ministerial Decision No. 82 of 2023 is crucial for taxable persons in the UAE. By maintaining audited financial statements, businesses can contribute to a fair and transparent taxation system, aligning with the UAE’s vision for a robust financial environment. It is imperative for taxpayers and relevant stakeholders to stay informed about any updates or amendments to the decision and adjust their practices accordingly for seamless compliance.