Here is a detailed explanation of “aggregated (or aggregate) financial statements / aggregate financials” under the UAE corporate tax (CT) regime: what it means, to whom it applies, its effective date, and key technical points (based on available guidance). Because the regime is relatively new and evolving, some aspects remain subject to further clarifications from the UAE Federal Tax Authority (FTA).

What are Aggregate Financial Statements?

In the UAE CT law context, aggregated financial statements refer to financial statements prepared for a tax group (i.e. a group of entities treated as a single taxable person for CT) by aggregating the individual (standalone) financial statements of each member of the tax group and making eliminations of intra‑group transactions, for the purpose of CT compliance.

These are not consolidated financial statements in the IFRS sense (i.e. they do not reflect goodwill, fair‑value adjustments, etc.). Instead, they present the group’s combined results on a line‑by‑line aggregation basis (with intra‑group eliminations).

  • Prepared by aggregating standalone financial statements of each member.
  • Intra‑group transactions are eliminated (income, expense, balances, gains/losses).
  • Consolidation adjustments (like goodwill, fair value uplift) are excluded, unless it’s an asset acquisition.
  • They must be audited and presented in AED.

Applicability – To Whom Do They Apply?

Aggregated financials apply specifically to tax groups under the UAE Corporate Tax regime.

Tax Group

  • A tax group is formed when a parent and subsidiaries elect to be treated as a single taxable person under UAE CT law.
  • The parent must apply to the FTA for recognition of the group.
  • Conditions include: common ownership, same financial year, and consistent accounting policies.

Important: If a taxpayer is a standalone entity, the concept of aggregated financials does not apply. They just use their standalone audited/unaudited statements for CT.

Effective Date

  • FTA Decision No. 7 of 2025 applies for tax periods commencing on or after 1 January 2025.
  • Earlier tax periods (before 2025) are covered by Ministerial Decision No. 82 of 2023.
  • Ministerial Decision No. 84 of 2025 (on audited financial statements) also applies from tax periods starting 1 January 2025 and replaces Decision 82 for later years.

Key Rules and Considerations

Topic Key Points
Aggregation basis Sum line‑by‑line the standalone financials of each group member.
Elimination Eliminate intra‑group income, expenses, balances, and unrealised gains/losses.
Exclusion of consolidation adjustments No goodwill or IFRS 3 adjustments (unless asset acquisition).
Consistent policies All members must apply uniform accounting policies.
Investments in non‑group entities Carried at cost less impairment (not equity method or fair value).
Presentation In AED. Must include statement of financial position, profit or loss, OCI, changes in equity, and notes.
Audit requirement Aggregated financials must be audited (special purpose framework).
Comparatives Challenges may arise for comparatives if earlier aggregated financials were not prepared.
Member leaving group Departing member adopts opening balances from aggregated statements (unless accounting standards prohibit).

Why Require Aggregate Financial Statements?

  1. Tax symmetry – ensures intra-group transactions don’t distort tax base.
  2. Simplification – avoids full IFRS consolidation complexities.
  3. Auditability – one unified set of financials for the FTA to review.
  4. Compliance – reduces manipulation opportunities and enforces consistency.

Practical Challenges

  • Aligning accounting policies across group entities.
  • Eliminating intra‑group balances and profits accurately.
  • Handling comparatives when prior aggregated financials don’t exist.
  • Audit complexities for large groups with many subsidiaries.
  • Reconciling accounting standards with CT requirements.

Summary

Aggregate financial statements under UAE CT law are required for tax groups (not standalone entities). They aggregate standalone financials, eliminate intra-group transactions, exclude IFRS consolidation adjustments, and must be audited. Effective for tax periods starting 1 January 2025, these statements form the basis for computing the group’s taxable income.