The Role of Audits in UAE Corporate Tax Compliance

With the introduction of UAE Corporate Tax, audits and accurate financial reporting have become increasingly important for businesses operating across the UAE. While not all companies are required to submit audited financial statements with their Corporate Tax return, audits play a vital role in supporting accurate, compliant and defensible tax filings.

Understanding how audits and UAE Corporate Tax work together helps businesses plan effectively, reduce compliance risks and avoid costly errors.

How Corporate Tax Is Calculated in the UAE

UAE Corporate Tax is calculated based on accounting profits, subject to specific adjustments set out under the Corporate Tax law. This means the quality and accuracy of your financial statements directly impact the accuracy of your Corporate Tax return.

Errors or inconsistencies in financial records can lead to incorrect tax calculations, increased compliance risk and potential challenges from the Federal Tax Authority. Audited financial statements provide additional assurance that the figures used for Corporate Tax purposes are reliable and prepared in line with applicable standards.

Are Audited Financial Statements Required for UAE Corporate Tax?

Not all UAE businesses are legally required to submit audited financial statements with their Corporate Tax return. However, many businesses are required to have audited accounts due to their jurisdiction, licence authority or regulatory obligations.

Mainland companies and many Free Zone entities are often required to prepare audited financial statements regardless of Corporate Tax thresholds. Even where an audit is not mandatory for tax filing purposes, having audited accounts can strengthen your Corporate Tax position and reduce the likelihood of enquiries or disputes.

In addition, banks, investors and regulators may require audited financial statements as part of their own compliance or reporting requirements.

Why Audits Matter for Tax Compliance

Audits help ensure that financial records are complete, consistent and supported by appropriate documentation. This is particularly important for UAE Corporate Tax compliance, where reported figures must be accurate and defensible.

Audited financial statements help to:

• Support taxable profit calculations
• Reduce the risk of misstatements or omissions
• Provide confidence in Corporate Tax submissions
• Demonstrate compliance during reviews or enquiries

For businesses that are subject to audit requirements, completing the audit before preparing the Corporate Tax return is considered best practice.

Timing the Audit and Corporate Tax Filing

Where an audit is required, it is typically completed first, followed by the preparation and filing of the Corporate Tax return. This ensures that the tax return reflects final audited figures rather than provisional or estimated numbers.

Proper planning helps businesses avoid delays, rushed filings and the need to amend Corporate Tax returns later. Aligning audit completion with Corporate Tax deadlines is especially important during the early years of Corporate Tax implementation in the UAE.

Common Misunderstandings Around Audits and Corporate Tax

A common misconception is that the introduction of Corporate Tax removes the need for audits. In reality, audits and Corporate Tax serve different purposes but are closely connected through financial reporting requirements.

Another frequent misunderstanding is that accountants can both prepare the financial statements and audit them for tax purposes. This is not permitted under UAE regulations and Federal Tax Authority guidelines, as audits must be completed by an independent licensed auditor.

Understanding these distinctions helps businesses remain compliant and avoid costly mistakes.

Getting the Right Support

Managing audits and UAE Corporate Tax together requires careful coordination and a clear understanding of regulatory requirements. Businesses that plan ahead and seek professional support are better positioned to meet deadlines and maintain ongoing compliance.

Strong financial reporting supported by properly completed audits provides a solid foundation for Corporate Tax compliance and long term business stability.