Ministerial Decision No. 82 of 2023
Ministerial Decision No. 82 of 2023
Whether or not to buy a book usually depends on the reviews of well-known book critics. Their wealth of knowledge, proficiency, and depth of experience in the subject make them trustworthy sources for determining a book’s value.
In a similar vein, looking through an organization’s financial statements helps determine how credible its financial standing is. Since audited accounts offer additional credibility, trust is generated through the expert evaluation of the auditor. Thanks to this transparency, stakeholders can see the true state of the company.
Thus, Auditing is quite important for companies.
The Minister of State for Financial Affairs thoroughly reviewed a number of important legal papers as part of the ongoing adjustments. Among them are:
• The Constitution
• Federal Law No. 1 of 1972, as amended, regarding the Authority of Ministries and the Powers of Ministers
• Federal Decree-Law No. 13 of 2016 on the Federal Tax Authority’s Establishment and Amendments
• Tax Procedures Federal Decree-Law No. 28 of 2022
• Federal Decree-Law No. 47 of 2022 Concerning the Business and Corporation Tax
The categories of taxable individuals who must compile and maintain audited financial statements were determined as a result of this review.
Who then requires auditing?
The main objective of Ministerial Decision No. 82 of 2023 is to identify the taxable organizations that are required to prepare financial accounts that have been audited. Authorities check these comments to make sure they are accurate. Among the categories are:
1. Organizations whose revenue for the applicable tax period exceeded AED 50,000,000.
2. Entities that qualify as free zones.
Clarity on what constitutes a qualifying free zone entity and a taxable entity is necessary to comprehend these groups. A resident or non-resident obtaining revenue from the UAE is considered a taxable company for the purposes of UAE corporate tax. Entities in qualified or exempt free zones are not included.
Even non-resident branches that are registered in free zones qualify as free zone entities. Under some circumstances, they receive 0% corporation tax. Ministerial Decision No. 82 of 2023 mandates that eligible free zone entities, regardless of revenue, conduct an audit of their records.
When is it necessary to conduct an audit?
The decision’s limitations, which were published on April 10, 2023, will take effect 15 days following notice, on April 25, 2023. This Finance Ministry ruling preserves the alluring no-income tax feature while bringing UAE business taxation into compliance with international standards.
The notification is still ambiguous on a few points, like the dates for submitting audited financial statements. But, we think that this might be necessary when the corporate tax return is filed. Updates, however, will be given as soon as the Ministry provides more clarification on this. For the most recent updates on UAE corporate tax on this platform, keep checking back with IBR Group.