Before 2023, a UAE statutory audit tested whether your financial statements fairly presented the year's numbers. After corporate tax, it does that — and more. The same accounts now feed a tax return, a free zone qualification test, and increasingly a bank's credit file. Auditors have adapted accordingly. If your last audit felt different from the one before it, this is why.
The 30-second version of UAE corporate tax
Federal Decree-Law No. 47 of 2022 introduced a federal corporate tax effective for financial years starting on or after 1 June 2023. The rate is 0% on taxable income up to AED 375,000 and 9% above that. Qualifying free zone persons may benefit from a 0% rate on qualifying income, subject to substance and documentation requirements. Small business relief — available to resident persons with revenue at or below AED 3 million — has been extended through 31 December 2029.
What your auditor now examines
1. Deferred tax on temporary differences
Under IFRS, audited accounts must recognise deferred tax where accounting profit and taxable profit differ — provisions not yet deductible, depreciation timing differences, unrelieved losses. Many UAE companies created their first deferred tax balances during the transition to corporate tax. Auditors test those calculations carefully, because they carry straight into the tax provision.
2. Transfer pricing and related-party transactions
Loans between sister companies, management fees charged by a parent, goods sold below market to a founder-owned entity — all of these are now transfer pricing exposures. Your auditor will ask whether transactions were priced at arm's length and whether documentation exists. Companies with revenue of AED 40 million or more must include a transfer pricing disclosure form with their return; larger groups face master file and local file obligations.
3. Free zone qualifying income
For free zone entities claiming 0% on qualifying income, the audit has become part of the evidence trail. Recent FTA decisions have added requirements for designated zones and free zone distributors of goods — including, in some cases, an auditor's report on the value of goods held. If your audited accounts and your qualifying income calculation tell different stories, expect questions.
4. Connected persons and private expenditure
Payments to shareholders, directors, and their family members are deductible only where they are genuine business expenses. Auditors now routinely test expense schedules for personal or connected-person items, because these are among the most common audit adjustments under the new regime.
Common mistakes we see before audit season
- Bookkeeping on cash basis. Corporate tax and IFRS both start from accruals. Cash-basis books cannot support either.
- No related-party register. If you cannot list every connected transaction, you cannot price or disclose them.
- Losses carried without support. Tax losses need continuity of ownership and activity records.
- Year-end pushed to the last week. Deferred tax and TP analysis take weeks, not days. Compressed year-ends produce audit qualifications.
A four-step preparation plan
- Close the year on time. Issue audited financial statements within 90 days of year-end — free zone filings depend on it, and CT deadlines count from the same date.
- Reconcile accounting profit to taxable profit. Keep a permanent schedule of permanent differences, temporary differences, and reliefs claimed.
- File transfer pricing disclosure wherever the AED 40 million threshold applies — the form is simple, but only if the underlying data is clean.
- Submit the return within nine months of year-end. The first major deadline — 30 September 2026 for December 2025 year-ends — has already tested many companies' readiness.
The audit is where your tax position stops being a plan and becomes a record. Prepare the two together, not in sequence.
Work with a firm that does both
Mano Prime Advisors combines IFRS statutory audit with corporate tax and transfer pricing advisory under one partner-led team. When your auditor and your tax adviser read the same ledger, inconsistencies surface in a meeting room — not in a notification.
Book a consultation before your next year-end, and we will map the audit and tax calendar for your entity on one page.
