FTA Decision 7 of 2025 – Audited SPFS for Tax Groups

August 12, 2025

Earlier this year, the Federal Tax Authority (FTA) issued Ministerial Decision No. 84 of 2025, mandating certain categories of taxable persons to prepare and maintain Special Purpose Audited Financial Statements for UAE Corporate Tax purposes.

Following this, the FTA has issued Decision No. 7 of 2025, offering clearer guidance for Tax Groups on preparing and maintaining these financial statements.

The decision outlines specific requirements for Audited Special Purpose Financial Statements (SPFS) for a Tax Group, where Aggregated Financial Statements must be prepared by combining the standalone financial statements of the Parent Company and each Subsidiary within the group

The FTA Decision 7 of 2025, states that:

Tax Groups must prepare special-purpose Aggregated Financial Statements.
These statements must be audited under a special purpose framework according to International Standards on Auditing (ISA).
Audited statements must be submitted to the Authority within 9 months after the Tax Period ends or such other date as determined by the Authority.

While preparing the aggregated Financial Statements of the Tax group, the taxable person should consider the following:

Aggregation is based on standalone Financial Statements, and the transactions between the members of the tax group must be eliminated.

Aggregated financial statements must be prepared annually based on the standalone Financial Statements of the members of the tax group for the relevant Financial Year.

Must comply with IFRS or IFRS for SMEs, with specific rules:
- If the member entity of tax group has acquired the entity, then it must exclude the effects of IFRS 3 business combinations and IFRS 10 consolidation.
- Adjustments for goodwill, bargain purchase gains, or fair value changes from consolidated statements must not be included in the aggregated financial statement.
- If a business combination occurs without acquiring a separate legal entity, the resultantassets, liabilities, goodwill, or bargain purchase gains in the acquiring company’s books must be fully included in the Aggregated Financial Statements.
- Aggregation must be done taking into consideration line-by-line items by the members of the tax group, 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.
- Any impairment recorded by the Parent on its direct investment in a Subsidiary in the Tax group must not be eliminated.
- If a Subsidiary directly holds another Subsidiary in the Tax Group, any impairment recorded on that investment must not be eliminated.
Key principles:
- Eliminate all inter-tax group income, expenses, gains, losses, and transactions.
- Exclude standalone statements of entities outside the Tax Group.
- Do not eliminate transactions with outside entities.
- Standalone Financial Statements must follow IFRS (or IFRS for SMEs) using uniform accounting policies.
- Aggregate pre-tax profits or losses of the members of the tax group.
- Investments in entities outside the Tax Group must be carried at cost less impairment.
- Present aggregated financial statements in AED.

Audited SPFS for Tax Groups: Notes and Disclosures

Aggregated statements must include the aggregated statement of financial position, profit or loss, other comprehensive income, and changes in equity.
Disclosures must explain the preparation framework, aggregation basis, key accounting policies, estimates, judgments applied, and supporting notes.

Members Leaving the Tax Group:

Members leaving the Tax Group must use the Tax Group’s asset and liability values as opening values in their standalone Financial Statements.
If accounting standards don’t allow this, taxable income must still be calculated as if these values were used.

The new guidelines will apply to tax periods commencing on or after 1 January 2025.

FTA Decision 7 of 2025 - Audited SPFS for Tax Groups: Key Takeaways

Tax Groups now have a formal financial reporting obligation for the Corporate Tax compliance
The aggregated financial statement of the Tax group must be in AED.
Updated rules reinforce the importance of financial reporting compliance as part of the Corporate Tax framework in the UAE.