Ministerial Decision No. 84 of 2025, issued by the UAE Ministry of Finance on March 25, 2025, marks a significant update to the financial reporting and audit requirements under the UAE Corporate Tax regime. Effective for tax periods commencing on or after January 1, 2025, this decision repeals and replaces Ministerial Decision No. 82 of 2023, reinforcing the UAE’s commitment to robust financial transparency and alignment with global tax practices.
Here’s a summary of its key provisions and implications:
1. Mandatory Audited Financial Statements
- Individual Taxable Persons (not part of a Tax Group): Must prepare and maintain audited financial statements if their annual revenue exceeds AED 50 million during the relevant Tax Period.
- Qualifying Free Zone Persons (QFZPs): All QFZPs are now universally required to prepare and maintain audited financial statements, regardless of their revenue, to maintain their preferential 0% Corporate Tax rate.
- Tax Groups: All Tax Groups are now explicitly mandated to prepare and maintain audited special purpose financial statements for Corporate Tax purposes. This removes the previous AED 50 million consolidated revenue threshold for Tax Groups. The decision indicates that the form, procedures, and rules for these statements will be specified by the Federal Tax Authority (FTA).
2. Mandatory IFRS Adoption (Context from MD 114/2023)
- While not solely introduced by MD 84/2025, this decision operates within the broader context established by Ministerial Decision No. 114 of 2023. All financial statements used for Corporate Tax purposes, including those subject to audit, must be prepared in full compliance with International Financial Reporting Standards (IFRS). Taxable Persons with revenue not exceeding AED 50 million may apply IFRS for Small and Medium-sized Entities (IFRS for SMEs). Cash basis accounting is permitted only if revenue does not exceed AED 3 million, or in exceptional circumstances with FTA approval.
3. Expanded Audit Scope
- The decision broadens the scope of mandatory audits, particularly by removing the revenue threshold for Tax Groups and reiterating the requirement for all QFZPs, leading to an increased demand for statutory audit services across more entities.
4. Stricter Record Retention
- All financial records, including statements, ledgers, invoices, and supporting documents, must be retained for at least seven years and be readily accessible to the FTA upon request.
5. New Requirements for Free Zone Distributors
- QFZPs engaged in the activity of distribution of goods or materials in or from a Designated Zone will be subject to additional procedures to be prescribed by the FTA.
6. Non-Resident Audit Threshold Clarification
- For Non-Resident Persons, only revenue derived through a UAE Permanent Establishment and/or nexus in the UAE will be taken into account when calculating the AED 50 million audit threshold.
7. Direct Corporate Tax Impact
- High-quality, timely audited financial statements are no longer merely a compliance exercise but are directly integrated into Corporate Tax calculations and preferential tax status eligibility (such as QFZP status). They are now a strategic necessity for tax compliance and optimization.
Status of Further Guidance: As of July 2, 2025, the anticipated detailed guidance from the Federal Tax Authority on the “form, procedures, and rules” for audited special purpose financial statements for Tax Groups, and “additional procedures” for Free Zone Distributors, has not yet been publicly released. Businesses should actively monitor official FTA announcements for these forthcoming details.
This Ministerial Decision underscores the UAE’s commitment to enhancing financial transparency, streamlining tax administration, and aligning its corporate tax framework with international best practices.
For more information on how Affiniax can ensure your compliance to Ministerial Decision No. 84 of 2025, contact us at mail@affiniax.com.
