Financial Statements and Related Audit Requirements for a Tax Group - CTP007

CTP007 - AGGREGATE FINANCIAL STATEMENTS AND AUDIT REQUIREMENT FOR TAX GROUPS

CTP007

Corporate Tax Public Clarification

Financial Statements and Related Audit Requirements for a Tax Group

Issue

The Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, and its amendments ("Corporate Tax Law") applies to Tax Periods commencing on or after 1 June 2023.

A Tax Group is two or more Taxable Persons treated as a single Taxable Person according to the conditions of Article 40 of the Corporate Tax Law, where an application to form a Tax Group has been made to, and approved by, the Authority.^[1]

Where such an application has been approved, the Tax Group, as a Taxable Person, is required to prepare aggregated Financial Statements for the purpose of determining its Taxable Income.^[2]^[3]^[4]

The aggregated Financial Statements for the purposes of determining the Taxable Income of the Tax Group for Corporate Tax purposes shall be prepared by aggregating the standalone Financial Statements of the members of the Tax Group and eliminating the transactions between them ("Aggregated Financial Statements").^[3]^[5]^[6]

The Aggregated Financial Statements of the Tax Group are prepared specifically for Corporate Tax purposes and may deviate from the consolidated Financial Statements prepared under the accounting standards applied by the Parent Company (i.e., International Financial Reporting Standards ("IFRS") or IFRS for small and medium enterprises ("IFRS for SMEs"), collectively referred to in this public clarification as "IFRS").

This public clarification explains how the Aggregated Financial Statements should be prepared and the associated audit requirements for such Aggregated Financial Statements.

Summary

Tax Groups are required to prepare Aggregated Financial Statements under Article 3 of Ministerial Decision No. 114 of 2023.^[3] This requirement applies to all Tax Periods commencing on or after 1 June 2023.

Aggregated Financial Statements shall be prepared by aggregating the annual standalone Financial Statements of the members of the Tax Group.^[6]^[7]

While standalone Financial Statements of members of a Tax Group must be prepared in accordance with IFRS, not all the principles relating to consolidation under IFRS can apply to Aggregated Financial Statements of a Tax Group. As a result, there are certain deviations from IFRS that are necessary to prepare the Aggregated Financial Statements.^[8]

These Aggregated Financial Statements will be prepared in accordance with a special purpose framework, which will depart from certain IFRS accounting standards as issued by the International Accounting Standards Board ("IASB"). However, other than the deviations from IFRS mentioned below, the Aggregated Financial Statements should comply with IFRS and the standalone Financial Statements of the individual members of a Tax Group should still be prepared in accordance with IFRS.^[8]

The primary statements to be presented in a set of Aggregated Financial Statements are:^[9]

Aggregated statement of financial position.
Aggregated statement of profit or loss.
Aggregated statement of other comprehensive income.
Aggregated statement of changes in equity.

Article 54(2) of the Corporate Tax Law and Ministerial Decision No. 82 of 2023 and Ministerial Decision No. 84 of 2025 determine the categories of Taxable Persons required to prepare and maintain audited Financial Statements for Corporate Tax purposes.^[10]^[11]

Tax Groups are required to prepare and maintain audited Financial Statements in the circumstances described in the above provisions. Thus, the Aggregated Financial Statements of a Tax Group prepared based on this framework must undergo a special purpose audit in accordance with the relevant International Standards on Auditing (''ISA'').^[12]

Detailed Analysis

Aggregated Financial Statements of a Tax Group

In the context of the Corporate Tax Law, Aggregated Financial Statements shall be used to present the financial results, assets and liabilities of a Tax Group.

The Aggregated Financial Statements shall be prepared by aggregating the annual standalone Financial Statements of the members of the Tax Group, eliminating transactions between them.^[6]^[7] Only transactions between the members of a Tax Group will be eliminated.^[5] This includes transactions between the Parent Company and each Subsidiary that is a member of a Tax Group or transactions between two or more Subsidiaries that are members of the same Tax Group.^[13]

Further, eliminations must include:

Valuation adjustments and provisions in relation to transactions between two or more members of the same Tax Group;^[13] and
Any change in accounting values of assets and liabilities that may have arisen in consequence of a gain or loss in respect of a transaction between members of the same Tax Group that has been eliminated.^[14]

However, transactions between members of a Tax Group must not be eliminated insofar as a member has recognised a deductible loss in a Tax Period prior to becoming a member of the Tax Group in respect of those transactions, until such deductible loss is fully reversed. Where a transaction is not eliminated, the Tax Group should include any income in relation to that transaction in determining the Taxable Income of the Tax Group for the Tax Period in which that income arises, up to the amount of the deductible loss that was previously deducted prior to becoming a member of the Tax Group.^[15]

Example: Transactions between members of a Tax Group that are not to be eliminated

Company X granted a loan to its wholly owned subsidiary (Company Y) in Year 1. In Year 2, Company X impaired the loan receivable from Company Y and recognised a deductible loss in its standalone Financial Statements.

In Year 3, Company X and Y formed a Tax Group. In Year 3, the loan transaction shall not be eliminated in the Aggregated Financial Statements of the Tax Group since Company X has recognised a deductible loss in respect of the loan transaction prior to forming the Tax Group.

In Year 4, Company X reversed the impairment in its standalone Financial Statements. This impairment should be included in the Taxable Income of the Tax Group up to the same amount as the deductible loss previously deducted by Company X before forming the Tax Group. After the reversal of the impairment has been taken into account up to the same amount as the deductible loss, the loan transaction will be eliminated.

Transactions with entities which are not members of the Tax Group (but still in scope of the consolidation under IFRS 10) shall not be eliminated for the purposes of Aggregated Financial Statements of the Tax Group. Standalone Financial Statements of entities which are not part of a Tax Group must not be aggregated with the Financial Statements of the Tax Group.^[16]

While standalone Financial Statements of members of a Tax Group must be prepared in accordance with IFRS,^[17] not all the principles relating to consolidation under IFRS can apply to Aggregated Financial Statements of a Tax Group. As a result, there are certain deviations from IFRS that are necessary to prepare the Aggregated Financial Statements.

The following requirements must be adopted in preparation of the Aggregated Financial Statements:

The Aggregated Financial Statements of the Tax Group must be presented in AED.^[18] This must follow the approach required in FTA Decision No. 13 of 2023.
All members of the Tax Group must have the same Financial Year. This is also required as a condition to be a member of a Tax Group.^[1]
All members of the Tax Group must apply uniform accounting policies (for example, where a Subsidiary follows an accounting policy that differs from the Parent Company, the Financial Statements of the Subsidiary must be adjusted to reflect the accounting policy of the Parent Company).^[19]
In accordance with Article 3 of Ministerial Decision No. 114 of 2023, the Aggregated Financial Statements shall be built up by aggregating standalone Financial Statements of the members of the Tax Group on a line-by-line basis through elimination of specific transactions as required by Article 42(1) of the Corporate Tax Law.^[20]
The accounting profit/loss that will be aggregated must be the pre-tax profit/loss of the members of the Tax Group.^[21] UAE Corporate Tax balances (current or deferred) if any, shall not be aggregated from the standalone Financial Statements of the members of the Tax Group, since this is not relevant to the calculation of Taxable Income.

Notably, the Parent Company is required to make the payment of the Corporate Tax on behalf of the Tax Group.^[22]

However, all members of the Tax Group are jointly and severally liable for the Corporate Tax Payable.^[23] There is no obligation under the Corporate Tax Law to allocate the tax liability between members of the Tax Group in standalone Financial Statements of the members.

Accordingly, the allocation of the Tax Group Corporate Tax expense (current or deferred tax) in the standalone Financial Statements of the members will depend on the commercial arrangement between the members.

The purpose of the Aggregated Financial Statements is only to arrive at the aggregated accounting net profit to be used in the preparation of the Tax Return. Where members of the Tax Group are subject to taxes other than Corporate Tax (for example, taxes in a foreign jurisdiction or other taxes levied in the UAE such as Emirate-level taxation), those taxes continue to be aggregated and presented in the aggregated income statement as follows:
Profit before tax
x
Less: Taxes other than UAE current Corporate Tax
(x)
Profit after non-UAE current Corporate Tax
x
Whilst a group may have prepared consolidated Financial Statements under IFRS, the starting point for Tax Group purposes is the annual standalone Financial Statements, i.e., unconsolidated Financial Statements. However, for the purposes of the aggregation, the standalone Financial Statements of an acquiring entity (within the Tax Group) should not reflect the accounting implications of business combinations (IFRS 3) and consolidated financial statements (IFRS 10) in relation to such business combinations.^[24] The adjustments relating to goodwill, gains on bargain purchases or fair value adjustments to assets and liabilities that are typically recorded in IFRS consolidated Financial Statements will not be recorded in the Aggregated Financial Statements.^[25] However, the above requirement does not apply to transactions where business combinations are executed without the acquisition of a separate legal entity. In those instances, the resultant assets, liabilities, goodwill or gains on bargain purchases are part of the separate Financial Statements of the acquiring entity and are to be aggregated completely into the Aggregated Financial Statements of the Tax Group.^[26]
Entities must perform a line-by-line aggregation of Financial Statement captions, including those relating to investments recorded by the Parent Company (and any investments held by Subsidiaries directly) and equity recorded by the Subsidiaries within the Tax Group without any eliminations between these captions.^[20] While this treatment may result in a grossing up of the aggregated balance sheet, this is required to completely exclude the impact of IFRS 10 and IFRS 3 accounting for goodwill, gains on bargain purchases, step acquisitions, if any, and fair value adjustments etc.
Further, any impairment that a Parent Company within the Tax Group has recorded over its investment in a Subsidiary within the Tax Group should not be eliminated for the purpose of aggregation of the Financial Statements.^[27] For the avoidance of doubt this equally applies where one Subsidiary directly holds another Subsidiary in the Tax Group.^[28]
All other inter-company balances (i.e. excluding investments recorded by the Parent Company and equity recorded by the Subsidiaries within the Tax Group), income, expenses, unrealised gains and losses, and any other transactions between members of the Tax Group shall be eliminated (in the same way as if consolidated Financial Statements were being prepared under IFRS),^[29] subject to the exception in Article 4 of both Ministerial Decision No. 301 of 2024 and Ministerial Decision No. 125 of 2023 (transactions prior to forming or joining a Tax Group), respectively.
Investments in subsidiaries, joint ventures and associates that are not members of the Tax Group, must be carried at cost less impairment, if any.^[30]
The primary statements to be presented in a set of Aggregated Financial Statements are:^[9]
- Aggregated statement of financial position.
- Aggregated statement of profit or loss.
- Aggregated statement of other comprehensive income.
- Aggregated statement of changes in equity.

Profit before tax	x
Less: Taxes other than UAE current Corporate Tax	(x)
Profit after non-UAE current Corporate Tax	x

The Aggregated Financial Statements of the Tax Group should present comparative information in respect of the preceding Tax Period for all amounts reported in the current Tax Period, with the exception of the first Tax Period for which the Tax Group exists (as it does not have a preceding Tax Period).

The disclosure requirements for the Aggregated Financial Statements are:^[29]

The framework under which the Aggregated Financial Statements have been prepared i.e. the special purpose Aggregated Financial Statements prepared solely for submission to the FTA to comply with the requirements of the Corporate Tax Law.
The basis of aggregation i.e. entities that are members of the Tax Group and the percentage of share capital owned, percentage of voting rights held and percentage of entitlement to the profits and net assets held, directly or indirectly, by the Parent Company.
Material accounting policies, estimates and judgments based on which the Financial Statements are prepared.
Explanatory information/notes that sufficiently support the numbers presented in the Aggregated Financial Statements. This must be in line with IAS 1: Presentation of Financial Statements.

Please refer to Section B of Annex A for an example of such disclosure.

Audited Financial Statements Requirement

For the purposes of Ministerial Decision No. 82 of 2023, a Tax Group (as a Taxable Person) is required to prepare and maintain audited Financial Statements, where the consolidated Revenue of the Tax Group exceeds AED 50 million during the relevant Tax Period.^[10] This threshold applies to all Tax Periods commencing before 1 January 2025.^[33]

For the purposes of Ministerial Decision No. 84 of 2025, all Tax Groups are required to prepare and maintain audited special purpose Financial Statements.^[11] This applies to Tax Periods commencing on or after 1 January 2025.^[34]

Members of a Tax Group are not required to maintain audited standalone Financial Statements for Corporate Tax purposes, even when a member's Revenue exceeds AED 50 million. This is applicable to all Tax Periods commencing on or after 1 June 2023.

The Aggregated Financial Statements of the Tax Group are prepared specifically for Corporate Tax purposes and may deviate from the consolidated financial statements prepared under the Accounting Standards applied by the Taxable Person.

Where an audit is required for Corporate Tax purposes, the Aggregated Financial Statements of a Tax Group must undergo a special purpose audit in accordance with the relevant International Standards on Auditing (''ISA'').^[12]

The audited Aggregated Financial Statements of a Tax Group must be submitted to the FTA at the time of filing the Tax Return.^[35]

Annex A of this Public Clarification provides a template for the auditor's report.

Financial Statements of member leaving the Tax Group

Where a Subsidiary leaves a Tax Group or a Tax Group ceases to exist, each Subsidiary leaving the Tax Group or the former Parent of the Tax Group, as the case may be, must prepare its standalone Financial Statements on the same accounting basis and elections as applied by the Tax Group and must adopt the values of the relevant assets and liabilities as recorded by the Tax Group as the opening values of those assets and liabilities in the standalone Financial Statements.^[36]^[37]

All members of a Tax Group must apply the same accounting basis and policies in their standalone Financial Statements which are used to prepare Aggregated Financial Statements of the Tax Group.^[19] Thus, even after leaving the Tax Group, the former member must, for Corporate Tax purposes, continue to prepare its standalone Financial Statements using the same accounting basis and policies.^[36]^[37]

Further, for Corporate Tax purposes each former member of the Tax Group must prepare its standalone Financial Statements using the values of the relevant assets and liabilities as recorded by the Tax Group.^[38] If the applicable Accounting Standards do not permit using such values, the former member of the Tax Group will calculate its Taxable Income as if the Accounting Standards would have allowed using such values.^[39]

Example: Value to be considered in standalone Financial Statements of members leaving the Tax Group

Impact of elimination of gain or loss on transfer of asset:

Company A and Company B are in a Tax Group. In Year 1, Company A has an asset with a book value of AED 100, which it transfers for AED 120 to Company B (for legal and accounting purposes). Company A will record a gain of AED 20 in its standalone Financial Statements and Company B will record the asset at AED 120 in its standalone Financial Statements. However, the gain of AED 20 in the standalone Financial Statements of Company A is eliminated upon aggregation and the asset will be recorded at AED 100 in the Aggregated Financial Statements of the Tax Group.

Impact of elimination on depreciation:

In subsequent years, Company B records an annual depreciation of AED 12 in its standalone Financial Statements (based on the asset value of AED 120 and a 10-year useful life of asset). However, in the Aggregated Financial Statements of the Tax Group the asset is recorded at AED 100 in Year 1. Accordingly, the asset will be depreciated at that value for the purposes of the Aggregated Financial Statements. In other words, any depreciation recorded in the standalone Financial Statements on the portion of the gain or loss that is eliminated in the Aggregated Financial Statements, shall be disregarded. Accordingly, the annual depreciation in the Aggregated Financial Statements is therefore AED 10.

Impact of leaving tax group after 2 years from the date of the transaction:

In Year 4, Company B leaves the Tax Group. Assuming that the asset is not a depreciable asset, the closing value of the asset in the Aggregated Financial Statements of the Tax Group is AED 100. The standalone Financial Statements of Company B prepared for financial reporting purposes will recognise a net book value of AED 120. However, for the purposes of Corporate Tax, Company B will be required to adopt the net book value of the asset as AED 100. This would be relevant when, for example, Company B disposes of the asset and a gain or loss is recognised in the income statement. For accounting purposes, the gain or loss will be determined based on a net book value of AED 120, whereas for Corporate Tax Purposes, the gain or loss will need to be determined based on a value of AED 100.

Impact of leaving Tax Group within 2 years from the date of the transaction:

However, an exception applies if clawback under Article 42(9) of the Corporate Tax Law is triggered. For example, if Company B leaves the Tax Group within two years from the date of transfer, the gain of AED 20 that was eliminated upon aggregation (and accordingly not included in the Taxable Income of the Tax Group) will be clawed-back. This means that the gain of AED 20 shall be taken into account in the Taxable Income of the Tax Group (since Company A is still a member of the Tax Group) on the date when Company B leaves the Tax Group.^[40] Company B shall get a corresponding adjustment to the cost base of the asset and the opening value of the asset in its standalone Financial Statements and thus after it leaves the Tax Group the opening value of the asset for Company B will be AED 120.^[41]

This Public Clarification issued by the FTA is meant to clarify certain aspects related to the implementation of the Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Business, and its amendments, and the implementing decisions.
This Public Clarification states the position of the FTA and neither amends nor seeks to amend any provision of the aforementioned legislation. Therefore, it is effective as of the date of implementation of the relevant legislation, unless stated otherwise.

Legislative References:

In this clarification, Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Business, and its amendments is referred to as "Corporate Tax Law", Ministerial Decision No. 82 of 2023 on the Determination of Categories of Taxable Persons Required to Prepare and Maintain Audited Financial Statements for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses is referred to as "Ministerial Decision No. 82 of 2023", Ministerial Decision No 114 of 2023 on the Accounting Standards and Methods for the Purposes of Federal Decree Law No. 47 of 2022 on the Taxation of Corporations and Businesses is referred to as "Ministerial Decision No. 114 of 2023", Ministerial Decision No. 125 of 2023 on the Tax Group for the Purposes of Federal Decree Law No. 47 of 2022 on the Taxation of Corporations and Businesses is referred to as "Ministerial Decision No. 125 of 2023", Ministerial Decision No. 301 of 2024 on the Tax Group for the Purposes of Federal Decree Law No. 47 of 2022 on the Taxation of Corporations and Businesses is referred to as "Ministerial Decision No. 301 of 2024", Ministerial Decision No. 84 of 2025 on Audited Financial Statements for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses is referred to as "Ministerial Decision No. 84 of 2025" and Federal Tax Authority Decision No. 7 of 2025 on the determination of the Requirements for Preparing and Maintaining Audited Special Purpose Financial Statements for a Tax Group for the purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses and its amendments, is referred to as "FTA Decision No. 7 of 2025".

Article 1 of the Corporate Tax Law defines the following terms as:

"Corporate Tax" – The tax imposed by the Corporate Tax Law on juridical persons and Business income.
"Corporate Tax Payable" – Corporate Tax that has or will become due for payment to the FTA in respect of one or more Tax Periods.
"Financial Year" – The Gregorian calendar year, or the twelve-month period for which the Taxable Person prepares Financial Statements.
"Revenue" – The gross amount of income derived during a Tax Period.
"Tax Group" – Two or more Taxable Persons treated as a single Taxable Person according to the conditions of Article 40 of the Corporate Tax Law.
"Tax Period"– The period for which a Tax Return is required to be filed.
"Taxable Person" – A Person subject to Corporate Tax in the UAE under the Corporate Tax Law.

Article 1 of Ministerial Decision No. 114 of 2023 defines the following term as:

"Financial Statements" – A complete set of statements as specified under the Accounting Standards applied by the Taxable Person, which includes, but is not limited to, statement of income, statement of other comprehensive income, balance sheet, statement of changes in equity and cash flow statement.

Article 1 of Ministerial Decision No. 301 of 2024 defines the following terms as:

"Parent Company" – A Resident Person that can make an application to the Authority to form a Tax Group with one or more Subsidiaries in accordance with Article 40(1) of the Corporate Tax Law.
"Subsidiary" – A Resident Person in which the share capital or Membership or Partnership Capital, as applicable, is held by a Parent Company, in accordance with Article 40(1) of the Corporate Tax Law.

Article 1 of FTA Decision 7 of 2025 defines the following term as:

"Aggregated Financial Statements" – Financial Statements prepared on the basis of the aggregation of the standalone Financial Statements of the Parent Company and each Subsidiary that is a member of the Tax Group in accordance with the framework specified in Article 3 of the Decision.

Footnotes

^[1]Article 40(1) of the Corporate Tax Law states that "Parent Company", can make an application to the Authority to form a Tax Group with one or more other Resident Persons, each referred to as a "Subsidiary", where all the following conditions are met:

The Resident Persons are juridical persons.
The Parent Company owns at least 95% (ninety-five percent) of the share capital of the Subsidiary, either directly or indirectly through one or more Subsidiaries.
The Parent Company holds at least 95% (ninety-five percent) of the voting rights in the Subsidiary, either directly or indirectly through one or more Subsidiaries.
The Parent Company is entitled to at least 95% (ninety-five percent) of the Subsidiary's profits and net assets, either directly or indirectly through one or more Subsidiaries.
Neither the Parent Company nor the Subsidiary is an Exempt Person.
Neither the Parent Company nor the Subsidiary is a Qualifying Free Zone Person.
The Parent Company and the Subsidiary have the same Financial Year.
Both the Parent Company and the Subsidiary prepare their financial statements using the same accounting standards.

^[2]Article 42(11) states a Tax Group must prepare consolidated financial statements in accordance with accounting standards applied in the UAE.

^[3]Article 3 of Ministerial Decision No. 114 of 2023 states for the purposes of Article 20(5)(b) of the Corporate Tax Law, the reference to the preparation of consolidated Financial Statements of a Tax Group under Article 42(11) of the Corporate Tax Law shall mean the preparation of standalone Financial Statements on the basis of the aggregation of the standalone Financial Statements of the Parent Company and each Subsidiary that is a member of the Tax Group, eliminating the transactions between them as required under Article 42(1) of the Corporate Tax Law.

^[4]Article 2(1) of FTA Decision No. 7 of 2025 states that for the purposes of Article 54 of the Corporate Tax Law referred to above, a Tax Group shall prepare special purpose financial statements in the form of Aggregated Financial Statements in line with the framework specified in Article 3 of the Decision.

^[5]Article 42(1) of the Corporate Tax Law states that for the purposes of determining the Taxable Income of a Tax Group, the Parent Company shall consolidate the financial results, assets and liabilities of each Subsidiary for the relevant Tax Period, eliminating transactions between the Parent Company and each Subsidiary that is a member of the Tax Group.

^[6]Article 3(1) of FTA Decision No. 7 of 2025 states that for the purposes of preparing the Aggregated Financial Statements, the standalone Financial Statements of the members of the Tax Group must be aggregated eliminating transactions between the members.

^[7]Article 3(2) of FTA Decision No. 7 of 2025 states that the Aggregated Financial Statements must be prepared annually based on the standalone Financial Statements of the members of the Tax Group prepared for the relevant Financial Year.

^[8]Article 3(3) of FTA Decision No. 7 of 2025 states that the Aggregated Financial Statements must comply with International Financial Reporting Standards ("IFRS") or International Financial Reporting Standards for small and medium-sized entities ("IFRS for SMEs"), subject to the following provisions:

The standalone Financial Statements of an acquiring entity which is a member of a Tax Group should not reflect the accounting implications of business combinations under IFRS 3 and consolidated financial statements prepared under IFRS 10 in relation to such business combinations for the purposes of aggregation of the financial statements.
The adjustments relating to goodwill, gain on bargain purchase or fair value adjustments to assets and liabilities that are recorded in IFRS compliant consolidated financial statements shall not be recorded for the purposes of preparing the Aggregated Financial Statements.
As an exception to paragraph (b), where business combinations are executed without the acquisition of a separate legal entity, the resultant assets, liabilities, goodwill or gain on bargain purchase are part of the separate Financial Statements of the acquiring entity and are to be aggregated completely into the Aggregated Financial Statements of the Tax Group.
Members of the Tax Group must perform a line-by-line aggregation of Financial Statement captions, including those relating to investments recorded by the Parent Company or any Subsidiary, or relating to corresponding equity recorded by the Subsidiaries within the Tax Group without any eliminations between these captions.
For the purposes of preparing the Aggregated Financial Statements, any impairment that the Parent Company has recorded over its investment in a Subsidiary in the Tax Group should not be eliminated where the Parent Company directly holds the Subsidiary in the Tax Group.
For the purposes of preparing the Aggregated Financial Statements, any impairment that a Subsidiary has recorded over its investment in another Subsidiary in the Tax Group should not be eliminated where one Subsidiary directly holds another Subsidiary in the Tax Group.

^[9]Article 4(1) of FTA Decision No. 7 of 2025 states that the statements to be presented in a set of Aggregated Financial Statements are:

Aggregated statement of financial position.
Aggregated statement of profit or loss.
Aggregated statement of other comprehensive income.
Aggregated statement of changes in equity.

^[10]Article 2 of Ministerial Decision No. 82 of 2023 states that for the purposes of Article 54(2) of the Corporate Tax Law, the following categories of Taxable Persons shall prepare and maintain audited financial statements:

A Taxable Person deriving Revenue exceeding AED 50,000,000 (fifty million United Arab Emirates dirhams) during the relevant Tax Period.
A Qualifying Free Zone Person.

^[11]Article 2(2) of Ministerial Decision No. 84 of 2025 states that for the purposes of Article 54(2) of the Corporate Tax Law and Article 3 of Ministerial Decision No. 114 of 2023 referred to above, a Tax Group shall prepare and maintain audited special purpose financial statements in accordance with the form, procedures and rules specified by the FTA.

^[12]Article 2(2) of FTA Decision No. 7 of 2025 states that for the purposes of Article 54(2) of the Corporate Tax Law and Article 2(2) of Ministerial Decision No. 84 of 2025, the Aggregated Financial Statements of a Tax Group must be audited under a special purpose framework in accordance with the relevant International Standards on Auditing (''ISA'').

^[13] Article 6(1) of Ministerial Decision No. 301 of 2024 (and Ministerial Decision No. 125 of 2023) states that for the purposes of Article 42(1) of the Corporate Tax Law and Article 4 of the Decision, transactions between the Parent Company and each Subsidiary that is a member of the Tax Group must include:

Transactions between two or more Subsidiaries that are members of the same Tax Group.
Valuation adjustments and provisions in relation to transactions between two or more members of the same Tax Group.

^[14]Article 6(2) of Ministerial Decision No. 301 of 2024 (and Ministerial Decision No. 125 of 2023) states that where a gain or loss in respect of a transaction between members of the same Tax Group has been eliminated under Article 42(1) of the Corporate Tax Law, such elimination shall also include any change in accounting value of the relevant assets and liabilities that may have arisen in consequence of that gain or loss.

^[15] Article 4 of Ministerial Decision No. 301 of 2024 (and Article 4 of Ministerial Decision No. 125 of 2023) states that:

For the purposes of Article 42(1) of the Corporate Tax Law, transactions between members of a Tax Group must not be eliminated insofar as a member has recognised a deductible loss in a Tax Period in respect of those transactions prior to forming or joining the Tax Group, until such deductible loss is reversed in full.
If, as a result of Clause 1 of this Article, a relevant transaction is not eliminated, the Tax Group must include any income in relation to that transaction in determining the Taxable Income of the Tax Group for the Tax Period in which that income arises up to the amount of the deductible loss that was previously deducted prior to forming or joining the Tax Group.

^[16]Article 3(4)(b) of FTA Decision No. 7 of 2025 states that the standalone Financial Statements of entities which are not part of a Tax Group must not be aggregated as part of the Aggregated Financial Statements of the Tax Group.

^[17]Article 3(4)(d) of FTA Decision No. 7 of 2025 states that standalone Financial Statements of the members of the Tax Group must be prepared in accordance with IFRS (or IFRS for SMEs).

^[18]Article 3(4)(h) of FTA Decision No. 7 of 2025 states that the Aggregated Financial Statements of the Tax Group must be presented in the United Arab Emirates Dirham.

^[19]Article 3(4)(e) of FTA Decision No. 7 of 2025 states that standalone Financial Statements of the members of the Tax Group must be prepared using uniform accounting policies.

^[20]Article 3(3)(d) of FTA Decision No. 7 of 2025 states that members of the Tax Group must perform a line-by-line aggregation of Financial Statement captions, including those relating to investments recorded by the Parent Company or any Subsidiary, or relating to corresponding equity recorded by the Subsidiaries within the Tax Group without any eliminations between these captions.

^[21]Article 3(4)(f) of FTA Decision No. 7 of 2025 states that the accounting profit or loss that will be aggregated must be the pre-tax profit or loss of the members of the Tax Group.

^[22]Article 40(5) of the Corporate Tax Law states that the Parent Company shall comply with all obligations set out in Chapters Fourteen, Sixteen and Seventeen of the Corporate Tax Law on behalf of the Tax Group.

^[23]Article 40(6) of the Corporate Tax Law states that the Parent Company and each Subsidiary shall be jointly and severally liable for Corporate Tax Payable by the Tax Group for those Tax Periods when they are members of the Tax Group.

^[24]Article 3(3)(a) of FTA Decision No. 7 of 2025 states that the standalone Financial Statements of an acquiring entity which is a member of a Tax Group should not reflect the accounting implications of business combinations under IFRS 3 and consolidated financial statements prepared under IFRS 10 in relation to such business combinations for the purposes of aggregation of the financial statements.

^[25]Article 3(3)(b) of FTA Decision No. 7 of 2025 states that the adjustments relating to goodwill, gain on bargain purchase or fair value adjustments to assets and liabilities that are recorded in IFRS compliant consolidated financial statements shall not be recorded in the Aggregated Financial Statements.

^[26]Article 3(3)(c) of FTA Decision No. 7 of 2025 states that, as an exception to Article 3(3)(b) of the Decision, where business combinations are executed without the acquisition of a separate legal entity, the resultant assets, liabilities, goodwill or gain on bargain purchase are part of the separate Financial Statements of the acquiring entity and are to be aggregated completely into the Aggregated Financial Statements of the Tax Group.

^[27]Article 3(3)(e) of FTA Decision No. 7 of 2025 states that for the purposes of preparing the Aggregated Financial Statements, any impairment that the Parent Company has recorded over its investment in a Subsidiary in the Tax Group should not be eliminated where the Parent Company directly holds the Subsidiary in the Tax Group.

^[28]Article 3(3)(f) of FTA Decision No. 7 of 2025 states that any impairment that a Subsidiary has recorded over its investment in another Subsidiary in the Tax Group should not be eliminated where one Subsidiary directly holds another Subsidiary in the Tax Group.

^[29]Article 3(4)(a) of FTA Decision No. 7 of 2025 states that subject to Article 3(3) of the Decision, any income, expenses, unrealised gains and losses, and any other transactions between members of the Tax Group shall be eliminated.

^[30]Article 3(4)(g) of FTA Decision No. 7 of 2025 states that investments in subsidiaries, joint ventures and associates that are not members of the Tax Group must be carried at cost less impairment.

^[31]Article 4(2) of FTA Decision No. 7 of 2025 states that the disclosure requirements for the Aggregated Financial Statements should include the following:

The framework under which the Aggregated Financial Statements have been prepared.
The basis of aggregation.
The material accounting policies, estimates and judgments based on which the Aggregated Financial Statements are prepared.
The explanatory information and notes that sufficiently support the numbers presented in the Aggregated Financial Statements.

^[32]Article 54(2) of the Corporate Tax Law states the Minister may issue a decision requiring categories of Taxable Persons to prepare and maintain audited or certified financial statements.

^[33] Article 3 of Ministerial Decision No. 84 of 2025 states that Ministerial Decision No. 82 of 2023 referred to above shall be repealed but it shall continue to apply to Tax Periods that commenced before 1 January 2025.

^[34] Article 4 of Ministerial Decision No. 84 of 2025 states that the Decision shall apply to Tax Periods commencing on or after 1 January 2025.

^[35]Article 2(3) of FTA Decision No. 7 of 2025 states that for the purposes of Article 54(1) of the Corporate Tax Law, the audited Aggregated Financial Statements of the Tax Group must be submitted to the Authority no later than (9) nine months from the end of the relevant Tax Period, or such other date as determined by the Authority.

^[36] Article 13 of Ministerial Decision No. 301 of 2024 states that for the purposes of Article 20 of the Corporate Tax Law, where a Subsidiary leaves a Tax Group or a Tax Group ceases to exist, each Subsidiary leaving the Tax Group or the former Parent of the Tax Group, as the case may be, must prepare its standalone Financial Statements on the same accounting basis and elections as applied by the Tax Group and must adopt the values of the relevant assets and liabilities as recorded by the Tax Group as the opening values of those assets and liabilities in the standalone Financial Statements.

^[37] Article 13 of Ministerial Decision No. 125 of 2023 states that for the purposes of Article 20 of the Corporate Tax Law, where a Subsidiary leaves a Tax Group or a Tax Group ceases to exist, each Subsidiary leaving the Tax Group and the former Parent of the Tax Group, as the case may be, shall prepare its standalone financial statements on the same accounting basis as applied by the Tax Group and shall adopt the values of the relevant assets and liabilities as recorded by the Tax Group as the opening values of those assets and liabilities in the standalone financial statements.

^[38]Article 5(1) of FTA Decision No. 7 of 2025 states that for the purposes of Article 13 of Ministerial Decision No 301 of 2024 referred to above, where a member leaves the Tax Group or the Tax Group ceases to exist, the member leaving the Tax Group shall adopt the values of the relevant assets and liabilities as recorded by the Tax Group as the opening values of those assets and liabilities in its standalone Financial Statements.

^[39]Article 5(2) of FTA Decision No. 7 of 2025 states that as an exception to Clause 1 of this Article, if the applicable Accounting Standards do not permit using such values, the member leaving the Tax Group shall calculate its Taxable Income as if the Accounting Standards would have allowed using such values.

^[40]Article 42(9) of the Corporate Tax Law states that Article 42(1) of the Corporate Tax Law shall not apply where an asset or liability has been transferred between members of the Tax Group and either the transferor or transferee leaves the Tax Group within (2) two years from the date of the transfer, unless the associated income would have been exempt from Corporate Tax or not taken into account under any other provisions of the Corporate Tax Law.

^[41]Any income that was not taken into account with regards to a transfer described in Article 42(9) of the Corporate Tax Law shall be taken into account on the date the transferor or transferee leaves the Tax Group, and shall result in a corresponding adjustment of the cost base for Corporate Tax purposes of the relevant asset or liability.

Annex A – Template for auditor's report of Aggregated Financial Statements

Section A

Illustrative auditor's report on Aggregated Financial Statements

Practitioner's notes:

Use of the auditor's report is restricted to the management of the relevant entities and the Federal Tax Authority ("FTA").
Other information is not applicable to the Aggregated Financial Statements and hence not considered in the audit opinion.
The FTA has not requested key audit matters, hence, they are not applicable for the audit of the Aggregated Financial Statements.
Auditors have no other reporting responsibilities required under local law or regulation that needs to be specifically referenced in the Aggregated Financial Statements. Therefore, paragraphs on "legal and other regulatory requirements" are not applicable.

INDEPENDENT AUDITOR'S REPORT TO [THOSE CHARGED WITH GOVERNANCE] OF [NAME OF THE COMPANY]

Opinion

We have audited the Aggregated Financial Statements of [Name of the Company] (the "Company" or "Parent Company") and its Subsidiaries (collectively referred to as the "Tax Group"), which comprise the aggregated statement of financial position as at [date], and the aggregated statement of income, the aggregated statement of other comprehensive income and the aggregated statement of changes in equity for the year then ended, and notes to the Aggregated Financial Statements, including material accounting policy information.

In our opinion, the accompanying Aggregated Financial Statements of the Tax Group for the Financial Year ended [date] are prepared, in all material respects, in accordance with the accounting policies described in Note [X] to the Aggregated Financial Statements.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the Aggregated Financial Statements section of our report. We are independent of the Tax Group in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) (the "IESBA Code") together with the ethical requirements that are relevant to our audit of the Aggregated Financial Statements in the United Arab Emirates, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of matter – basis of accounting and restriction on distribution and use

We draw attention to Note [X] to the Aggregated Financial Statements, which describes the basis of accounting. The Aggregated Financial Statements are prepared solely to assist the Tax Group in preparing Tax Returns and for submission to the FTA as required by Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, and its amendments. As a result, the Aggregated Financial Statements may not be suitable for another purpose. Our report is intended solely for the information and use of the Tax Group and the FTA and should not be distributed to or used by parties other than the Tax Group or the FTA. Our opinion is not modified in respect of this matter.

Responsibilities of management [and those charged with governance] of the relevant entities for the Aggregated Financial Statements

Management of the relevant entities is responsible for the preparation of these Aggregated Financial Statements in accordance with the accounting policies described in Note [X] to the Aggregated Financial Statements, and for such internal control as management determines is necessary to enable the preparation of Aggregated Financial Statements that are free from material misstatement, whether due to fraud or error.

[Those charged with governance] are responsible for overseeing the Tax Group's combined financial reporting process.

INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF [NAME OF THE COMPANY] (CONTINUED)

Report on the audit of the Aggregated Financial Statements (continued)

Auditor's responsibilities for the audit of the Aggregated Financial Statements

Our objectives are to obtain reasonable assurance about whether the Aggregated Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Aggregated Financial Statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the Aggregated Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Tax Group's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Plan and perform the Tax Group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the Tax Group as a basis for forming an opinion on the Aggregated Financial Statements. We are responsible for the direction, supervision and review of the audit work performed for the purposes of the Tax Group audit. We remain solely responsible for our audit opinion.

We communicate with [those charged with governance] regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide [those charged with governance] with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

For [Name of Audit firm]

Signed by:

[Name of partner]

Partner

Registration No: [x]

[Date]

[Emirate], United Arab Emirates

Section B

Illustrative basis of preparation to be included in the Aggregated Financial Statements

Practitioner's note: This section lays down the mandatory "basis of preparation" wording to be included in the Aggregated Financial Statements.

BASIS OF PREPARATION

Statement of compliance

These Aggregated Financial Statements have been prepared solely to assist the Tax Group in preparing Tax Returns and for submission to the Federal Tax Authority ("FTA") as required by Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, and its amendments based on:

Material accounting policies described in note [x]
Critical accounting estimates and judgments described in note [x]

The Parent Company also prepares/d separately the consolidated financial statements in accordance with the International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board (IASB), and applicable requirements of the UAE Federal Decree Law No. 32 of 2021 and the Memorandum of Association of the Company. These consolidated financial statements are different from the Aggregated Financial Statements prepared for Corporate Tax purposes.

Basis of aggregation

The Aggregated Financial Statements have been prepared in accordance with the [Aggregated Financial Statements framework issued by the FTA]

Scenario: Parent Company aggregates the results of Subsidiaries with an ownership of 95% or more that are members of a Tax Group. Results of all other subsidiaries that are not members of the Tax Group are carried at cost less impairment losses, if any.

These Aggregated Financial Statements comprise the financial statements of the Parent Company and the following Subsidiaries where the Parent Company [owns at least 95% of the share capital (directly or indirectly)] (and) [holds at least 95% of the voting rights (directly or indirectly)] (and) [is entitled to at least 95% of the profits and net assets (directly or indirectly)]

Name of subsidiary	Country of incorporation	Registration date in the commercial register	Ownership percentage (direct or indirect)

Remaining subsidiaries (that are not members of the Tax Group) are not consolidated and are carried at historical cost.

Name of subsidiary	Country of incorporation	Registration date in the commercial register	Ownership percentage (direct or indirect)

The financial statements of the Parent Company and its Subsidiaries within the Tax Group have been aggregated on a line-by-line basis. Adjustments arising from business combinations of legal entities within the Tax Group, such as goodwill, gain on bargain purchase and fair value adjustments of assets and liabilities and inter-company eliminations relating to investment of the acquiring company and equity of the Subsidiaries within the Tax Group have not been incorporated in these Aggregated Financial Statements. Assets, liabilities, goodwill (or) gain on bargain purchase relating to business combinations executed without the acquisition of a separate legal entity are part of the separate financial statements of the acquiring company and are aggregated completely into these financial statements.

All other inter-company balances, income, expenses and unrealised gains and losses and transactions between entities within the Tax Group have been eliminated.