09 Dec 2025
With the UAE corporate tax regime now fully effective, businesses need to comply with the aggregated financial statement rules in the UAE for tax groups under FTA Decision No. 7 of 2025. The rules redefine group entities' reporting of finances with a view to ensuring transparency, accuracy, and compliance with International Financial Reporting Standards (IFRS).
The objective is straightforward: develop one financial picture of the entire group while also maintaining compliance with the UAE Ministry of Finance tax guidelines. For companies that have activities across several entities, studying these regulations is necessary in order to report corporate taxes correctly.
Understanding Tax Groups Under the UAE Corporate Tax Law
As defined by the FTA's Tax Groups Guide (CTGTGR1, Jan 2024), a tax group is a mechanism that allows two or more resident juridical persons (a parent company and subsidiaries) to be taxed as one.
This structure offers several advantages:
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Streamlined tax returns – just one per group.
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Intragroup transactions are generally disregarded for tax purposes.
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Centralized computation of losses and taxable income.
Yet, all these advantages come with responsibility. Each group should have strong documentation and prepare consolidated financial statements that accurately depict the consolidated financial position of all group members.
Tax Group Eligibility UAE 2025: Meeting the Formation Conditions
Forming a tax group under the UAE tax group rules 2025 requires meeting stringent eligibility conditions as defined in Article 40 of the Corporate Tax Law. The FTA guide specifies that:
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All members must be resident juridical persons.
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The parent company must own at least 95% of the subsidiary's share capital, voting rights, and entitlement to profits and net assets.
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Neither parent nor subsidiaries can be an Exempt Person or a Qualifying Free Zone Person.
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All members must share the same financial year and use consistent accounting standards (IFRS or IFRS for SMEs).
Meeting these conditions ensures the group can be registered and recognized under UAE tax law. Once approved, the parent company assumes responsibility for tax filings and compliance.
Defining Aggregated Financial Statements: A Key Shift in Reporting
According to FTA Decision No. 7 of 2025, tax groups will have to prepare Audited Special Purpose Financial Statements in the form of Aggregated Financial Statements (AFS).
Unlike consolidated financial statements, which reverse ownership structures and consolidate entities as if they were one entity, aggregated statements:
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Consolidate the individual financial statements of all the group members.
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Eliminate intra-group transactions (revenue, expenses, unrealized profit, and loss).
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Maintain individual-entity information without consolidation adjustments such as goodwill or fair-value remeasurement.
Doing so provides the FTA with a proper view of the group's economic performance without undermining audit integrity.
Framework for Preparation of Aggregated Financial Statements
According to Article 3 of Decision No. 7 of 2025, the preparation of aggregated financial statements must adhere to the following framework:
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Use standalone financial statements of each group member prepared annually under IFRS or IFRS for SMEs.
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Eliminate intragroup transactions but retain intercompany investment values and impairments.
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Maintain uniform accounting policies across all entities.
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Present statements exclusively in UAE Dirhams (AED).
Each tax group must include:
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Aggregated statement of financial position.
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Aggregated statement of profit or loss.
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Aggregated statement of other comprehensive income.
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Aggregated statement of changes in equity.
Submission and Audit Requirements
Every tax group must submit its audited aggregated financial statements to the FTA within nine months of the end of its tax period. These statements must be prepared and audited in accordance with the ISA.
Failure to comply with these timelines or audit requirements may result in administrative penalties and delays in UAE corporate tax filings.
This also feeds directly into the corporate tax audit framework, which will continue to require businesses to post regular, traceable financial accounts between entities.
When a Member Leaves a Tax Group
Decision No. 7 of 2025 also clarifies how exiting members must handle financial data. When a member leaves a tax group, it must adopt the asset and liability values recorded in the group's aggregated financial statements as the opening balances in its standalone financial statements.
If the accounting standards prohibit using these values, the entity must calculate taxable income as if such use were permissible. This rule ensures seamless continuity and prevents post-exit manipulation of asset values.
Advantages of Forming a Tax Group in the UAE
The UAE corporate tax group benefits are as follows:
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Administrative ease: Single tax return for the whole group.
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Tax efficiency: Losses of one member can offset another's profits.
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Simplified Tax: Reduced intercompany tax complexity.
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Clear reporting: Standard format under aggregated financial statements.
However, the benefits apply only to those who are fully compliant with the UAE Ministry of Finance tax guidelines and are audit-compliant.
Common Challenges and Considerations
While tax grouping reduces compliance burden, firms typically find themselves facing challenges such as:
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Standardization of all the subsidiaries' accounting policies.
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Coordinating the elimination of intercompany balances.
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Providing for prompt submission and auditing to the FTA.
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Training internal teams on interpreting aggregated data.
Professional assistance from accredited audit firms ensures that each step—from formation to filing—is conducted in compliance with aggregated financial statement rules in the UAE for tax groups.
The Road Ahead for UAE Tax Groups
With the UAE continuing to adopt international standards for tax transparency, consolidated financial statements are now at the heart of company tax administration. The FTA's structured framework ensures consistency, accuracy, and accountability—enabling businesses to demonstrate compliance confidently.
For tax groups, mastering these rules is not just about avoiding penalties; it's about optimizing the UAE corporate tax group benefits while building long-term audit readiness.
Trust AMCA Auditing for Expert Tax Group Compliance
At AMCA Auditing, we specialize in helping UAE businesses navigate complex tax group rules and prepare compliant aggregated financial statements.
Ensure your group remains compliant, audit-ready, and efficient.
Call us: +971 4 240 8784
Email: info@amcauditing.com
FAQs
1. What is the main difference between consolidated and aggregated financial statements?
Consolidated statements merge all entities into one reporting entity, while aggregated statements combine the standalone reports of each tax group member, eliminating intra-group transactions.
2. Who needs to prepare aggregated financial statements?
Every approved UAE tax group must prepare and audit aggregated financial statements.
3. What are the deadlines for submission?
Tax groups must file their audited aggregated financial statements with the FTA within nine months after the end of their financial year.
4. Are free zone companies eligible to form a tax group?
No. Qualifying Free Zone Persons cannot be members of a corporate tax group under UAE law.
5. What accounting standards apply?
The members should use IFRS or IFRS for SMEs, with all members following consistent accounting policies.
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