Audited financial statements: what it means for UAE businesses.

What audited financial statements means

Also called: Audited accounts.

Audited financial statements are a company's annual accounts, usually the balance sheet, profit and loss statement, statement of changes in equity, cash flow statement and notes, on which an independent auditor has given an opinion. The audit does not guarantee the numbers are perfect. It gives users reasonable assurance that the accounts follow the applicable accounting standard.

Two separate UAE rules create the obligation. The Commercial Companies Law requires every joint stock company and limited liability company to have one or more auditors audit its accounts each year. Corporate Tax adds its own test: under Ministerial Decision No. 84 of 2025, for tax periods starting on or after 1 January 2025, a Taxable Person that is not a Tax Group and has Revenue above AED 50 million, and every Qualifying Free Zone Person whatever its size, must prepare and maintain audited financial statements. A Tax Group prepares audited special purpose statements.

For an SME the cost of an audit is small next to the cost of missing one. A free zone company that skips its audit can lose Qualifying Free Zone Person status, and the Federal Tax Authority can ask for the statements behind any return.

How it works

• Commercial Companies Law, Article 27: every joint stock company and LLC must have its accounts audited yearly, and annual accounts must include at least a balance sheet and a profit and loss account.
• Article 102 of the same law: an LLC's auditor is elected each year by the general assembly of partners.
• Corporate Tax Law, Article 54: the Minister may require categories of Taxable Persons to keep audited statements, and the Federal Tax Authority may request the statements used to work out Taxable Income.
• Ministerial Decision No. 84 of 2025 sets the categories for tax periods starting on or after 1 January 2025. Ministerial Decision No. 82 of 2023 still governs earlier periods.
• The Federal Tax Authority's accounting standards guide states that the audit must be carried out by an auditor registered in the UAE, and that the AED 50 million threshold is not pro-rated for a short or long tax period.

Worked example

A small free zone distributor is a Qualifying Free Zone Person with Revenue of AED 4.2 million and Taxable Income of AED 600,000, all of it Qualifying Income. The table shows what happens if it skips the audit and loses the status.

Revenue for the year	AED 4,200,000
Taxable Income	AED 600,000
Corporate Tax as a Qualifying Free Zone Person	AED 0
If status lost: first 375,000 at 0%	AED 0
If status lost: remaining 225,000 at 9%	AED 20,250

Revenue far below AED 50 million does not remove the audit requirement for a Qualifying Free Zone Person, and missing it turns a nil bill into AED 20,250.

Common mistakes

• Assuming that a business below AED 50 million never needs an audit. The Corporate Tax threshold is only one rule: every LLC needs an annual audit under the Commercial Companies Law, and every Qualifying Free Zone Person needs one for Corporate Tax.
• Pro-rating the AED 50 million threshold for a first tax period of 18 months or 7 months. The Federal Tax Authority's guide says it is not pro-rated.
• Leaving the audit until after the Corporate Tax return is due. The return should be built on the final, audited numbers, not a draft that later changes.

The law

• Ministerial Decision No. 84 of 2025 on Audited Financial Statements, Articles 2, 3 and 4
• Federal Decree-Law No. 47 of 2022, as amended, Article 54 (Financial Statements)
• Federal Decree-Law No. 32 of 2021 on Commercial Companies, Article 27 (Accounts of the Company) and Article 102 (Auditor of the Company)

Frequently asked questions

Does a mainland LLC with Revenue of AED 5 million need audited accounts?

Not for Corporate Tax, unless it is in a Tax Group. But Article 27 of the Commercial Companies Law requires every LLC to have its accounts audited yearly, so the company law answer is yes.

Does the auditor have to be based in the UAE?

The Federal Tax Authority's guide says the audit must be performed by a UAE registered auditor under Federal Law No. 12 of 2014 on the Regulation of the Auditing Profession, read with the ministerial resolution on international auditing standards.

Related terms

Qualifying Free Zone Person · IFRS for SMEs · Year-end close · Going concern · Limited liability company. See every term in the UAE tax glossary.

For the full picture, read our guide: Audit Requirements for UAE Companies Under Corporate Tax.

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