The Ministry of Finance (MoF) of the United Arab Emirates introduced a new Corporate Tax (CT) system that started on June 1, 2023. This change helped align the UAE with global taxation standards and promoted transparency across all business sectors. The new tax structure makes it easier for companies to follow financial rules while still protecting start-ups and small businesses from heavy burdens.
Despite the new law, the UAE, especially Dubai, continues to maintain one of the lowest corporate tax rates in the world. This makes the country a top business hub for investors. Every registered company must now file a corporate tax audit to ensure compliance and accuracy in tax reporting. With the professional guidance of Mubarak Al Ketbi (MAK) Auditing, businesses can smoothly manage their audits, avoid penalties, and stay compliant with Federal Tax Authority (FTA) regulations.
The introduction of this system also highlights the UAE’s strong commitment to maintaining a business-friendly environment while adhering to international standards. It strengthens economic growth and investor confidence in the country’s regulatory system.
What Is a Corporate Tax Audit in the UAE?
A Corporate Tax Audit in the UAE is an official review carried out by the Federal Tax Authority (FTA) to verify whether a company’s financial records accurately represent its taxable income. The audit ensures that the company paid the correct amount of tax as required by law.
During this process, an auditor carefully examines the company’s financial statements, tax returns, invoices, and supporting documents. The main goal is to identify errors, omissions, or any misleading information. This process ensures that every organization follows the UAE Corporate Tax Law correctly.
The FTA uses corporate tax audits to ensure all taxpayers stay accountable. Businesses that fail to meet audit requirements may face penalties or legal actions. Therefore, companies operating in the UAE must prepare their records accurately to avoid compliance risks.
Corporate tax audits promote transparency, build trust, and encourage financial discipline across all industries.
Who Needs a Corporate Tax Audit in the UAE?
As per Ministerial Decision No. 82 of 2023, certain categories of businesses are required to undergo a corporate tax audit. These include:
- Businesses with annual income exceeding AED 50 million.
- Qualifying Free Zone Persons who are registered under the Federal Tax Authority.
The FTA does not conduct audits randomly. Companies are selected based on financial thresholds, risk factors, or business categories. If an entity fails to maintain its tax compliance, it could face significant fines.
To avoid penalties, every company should ensure that its financial statements, reports, and tax submissions are complete and accurate. Maintaining transparency builds trust between businesses and the authorities while ensuring smoother operations in the long run.
How to Prepare for a Tax Audit in Dubai
Proper preparation makes the audit process stress-free and efficient. Here are a few simple but effective steps every business in Dubai should follow:
- Maintain Accurate Financial Records: Keep invoices, receipts, contracts, and statements organized and up-to-date.
- Understand UAE Tax Regulations: Familiarize yourself with the corporate tax and VAT laws.
- Review Filed Returns: Double-check your tax filings for calculation errors or missing entries.
- Create Internal Controls: Use internal checks and approval systems to reduce the risk of fraud or mistakes.
- Be Prepared for FTA Queries: Keep a knowledgeable representative ready to answer questions from auditors.
By following these steps, companies can ensure a seamless and professional audit experience.
Corporate Tax Audit Procedure in the UAE
The FTA follows a structured approach when conducting a corporate tax audit. Each audit includes several main phases:
- Selection Phase:
The FTA selects companies based on different parameters, such as:- Annual turnover exceeding FTA thresholds.
- Industry-specific risk levels.
- Inconsistencies or sudden changes in reported income.
- Random sampling for fairness and transparency.
- Notification & Meeting:
Once selected, the company receives a formal notification explaining the audit’s purpose, scope, and duration. The FTA may hold an initial meeting to discuss requirements, documentation, and communication protocols. - Preparation for the Audit:
- Prepare audited financials and tax returns for recent years.
- Create a document checklist categorized by year and type.
- Provide soft copies of essential data.
- Assign one responsible team member to coordinate with auditors.
A structured preparation strategy reflects professionalism and helps build credibility during the audit.
Corporate Tax Audit Documentation and Record Retention
Maintaining a proper record system is vital for corporate tax compliance. The FTA requires companies to retain financial and tax-related records for at least seven years after the end of each tax period.
Documents to be maintained include:
- Audited financial statements for each fiscal year.
- Copies of corporate tax returns filed.
- Invoices, both purchase and sales.
- Contracts, payroll records, bank statements, and receipts.
- Tax payment proofs and depreciation schedules.
These records allow auditors to verify reported figures accurately and demonstrate a company’s dedication to transparency.
Audit Obligations for Free Zone Companies
Entities operating in UAE Free Zones must maintain audited financial statements regardless of their revenue. These records confirm whether the company qualifies as a Free Zone Person under the corporate tax framework.
A professional firm like Mubarak Al Ketbi (MAK) Auditing can help Free Zone companies maintain compliance by ensuring that reports meet FTA requirements and are submitted on time.
Corporate Tax Audit for Tax Groups
Companies that form a tax group must prepare consolidated financial statements. This allows both parent companies and subsidiaries to meet corporate tax requirements under a unified registration.
This consolidated approach reduces duplication, simplifies reporting, and enhances accuracy in group-level financial audits.
Audit & Compliance for Natural Persons
Natural persons who earn more than AED 1 million annually from business or professional activities must also register for corporate tax and maintain financial statements.
Such individuals need to follow the same documentation and audit guidelines applicable to corporate entities. Mubarak Al Ketbi (MAK) Auditing assists professionals in maintaining accurate books and handling audit submissions.
UAE Corporate Tax Audit Report Explained
Under Ministerial Decision No. 82 of 2023, every company that exceeds AED 50 million in revenue must submit audited financial statements.
An audit report verifies the financial accuracy and confirms that the business complies with UAE Corporate Tax Law. Auditors also ensure confidentiality while reporting any irregularities.
By submitting accurate reports, businesses enhance their reputation and build investor confidence. A clean audit report from Mubarak Al Ketbi (MAK) Auditing demonstrates transparency, professionalism, and strong internal control.
Corporate Tax Audit for Small and Medium Enterprises (SMEs)
SMEs play a major role in the UAE economy but often struggle with limited resources during audits. Challenges like record-keeping and understanding tax law can make the process complicated.
To overcome these issues, SMEs should:
- Partner with professional consultants like Mubarak Al Ketbi (MAK) Auditing.
- Adopt digital accounting systems for better record management.
- Keep clear policies for document storage.
- Stay informed about new FTA guidelines.
By doing this, SMEs can make their audits easier, faster, and compliant with all FTA rules.
Benefits of Corporate Tax Audits
A corporate tax audit isn’t just a legal requirement; it’s also beneficial to businesses in many ways:
- Improved Tax Compliance: Audits help identify mistakes early so that companies can correct them.
- Reduced Risk of Penalties: Detecting and fixing errors early saves money and protects reputation.
- Enhanced Internal Systems: The audit process strengthens record-keeping and internal checks.
- Increased Stakeholder Trust: Clean audit reports improve credibility with investors and government authorities.
A corporate tax audit ensures financial clarity and helps businesses make better decisions. It also shows that the UAE is serious about maintaining transparent and ethical corporate practices.
Corporate Tax Audit Penalties and Compliance
The FTA applies strict penalties for non-compliance:
- A AED 10,000 penalty for failing to register by March 1, 2024.
- AED 500–1,000 per month fines for delayed tax filing.
- Up to AED 20,000 for repeated or severe violations.
Companies can avoid such penalties by filing returns on time, maintaining complete documentation, and following FTA procedures. Mubarak Al Ketbi (MAK) Auditing helps firms prevent errors and manage tax obligations efficiently.
Cooperation Between FTA and MoF
The Federal Tax Authority (FTA) and the Ministry of Finance (MoF) work closely to ensure smooth tax administration.
- The MoF designs the policy and legislative framework.
- The FTA implements and enforces these laws.
- Both collaborate to enhance compliance, transparency, and fairness in the UAE’s taxation system.
This cooperation allows businesses to operate in a stable environment with clear guidelines and professional support from auditing firms like Mubarak Al Ketbi (MAK) Auditing.
UAE Corporate Tax Financial Statements
Every taxpayer with revenue above AED 50 million must maintain audited financial statements following IFRS (International Financial Reporting Standards).
Companies under a tax group must consolidate their financial data with their parent company. They must also maintain records for at least seven years after the tax year ends.
Maintaining proper financial statements is essential for accurate tax reporting, easy audits, and financial transparency. Mubarak Al Ketbi (MAK) Auditing helps companies prepare IFRS-compliant financial statements that meet all FTA requirements.
What Can Help – Mubarak Al Ketbi (MAK) Auditing
Mubarak Al Ketbi (MAK) Auditing provides specialized support for corporate tax audits in the UAE. Our expert team ensures that your business stays compliant with FTA laws, keeps accurate records, and submits audits on time.
We also help businesses understand their tax responsibilities and reduce penalties through strategic advisory and documentation support.
You Can Rely on Us for:
- Complete audit assistance and FTA representation.
- Guidance for Free Zone and Mainland entities.
- Expert financial statement preparation.
- Compliance audits for SMEs and corporate groups.
- Custom consultation for natural persons and startups.
For more information visit our office:
Saraya Avenue Building – Office M-06, Block/A, Al Garhoud – Dubai – United Arab Emirates
Contact / WhatsApp: +971 50 276 2132
