As the United Arab Emirates (UAE) maintains its transformation into a globally reputable financial jurisdiction, companies working within Abu Dhabi Global Market (ADGM) must navigate a more complicated regulatory and tax compliance landscape. The introduction of the UAE Corporate Tax regime in June 2023 delivered new responsibilities, specifically for companies searching to maintain the high attractive 0% corporate tax-rate available to Qualifying Free Zone Persons (QFZPs).
This blog will discover the ADGM corporate tax return process including financial statements preparation, audit requirements, and filing deadlines, and the importance of QFZP status in ensuring compliance.
ADGM: A Modern Financial Center with Unique Regulations
ADGM is an independent international financial centre based in Abu Dhabi, established in 2013. It operates under a civil and business legal framework based on English common law. The Registration Authority (RA) oversees organization formation and regulatory compliance, along with the guidance and audit of ADMG financial statements filing.
Under the Companies Regulations 2020 (CR 2020) and Commercial Licensing Regulations 2015 (CLR 2015), all ADGM companies are required to hold accounting records and, in most cases, submit an annual financial statement. Even dormant companies are required to maintain accounting records for at least 10 years.
Financial Statements: Core Compliance for All ADGM Entities
All ADGM entities must prepare annual financial statements unless they qualify for unique exemptions. These statements include:
- Individual accounts for every standalone entity
- Group accounts for parent companies, unless exempt
Accounts must follow International Financial filing Standards (IFRS) issued by the IASB. Directors maintain a fiduciary responsibility to make sure those accounts are a true and right illustration of the organization’s financial position, and that they must not approve financial statements unless they are accurate.
Audit Requirements: When Is an Audit Mandatory?
CR 2020 mandates annual audits for all ADGM companies unless they qualify for exemption. However, QFZPs aren’t eligible for audit exemptions, even supposing they meet small organization thresholds. Below is a breakdown of who qualifies for an exemption:
1. Small Standalone Companies
- Turnover ≤ USD 13.5million
- ≤ 35 employees
2. Small Parent Companies
- Group turnover ≤ USD 13.5million (net) or USD 16.2 million (gross)
- Group worker count ≤ 35
3. Subsidiary Companies
- If consolidated accounts are submitted by the parent
4. Dormant Companies
- No significant accounting activity
- Must claim dormant status inside balance sheet
Note: These audit exemptions do not apply QFZPs under Corporate Tax Law.
UAE Corporate Tax and QFZPs: Understanding the 0% Tax Benefit
Under the Federal Decree-Law No. 47 of 2022, the standard corporate tax rate within the UAE is 9%. However, Free Zone companies along with the ones in ADGM can get access to a 0% company tax-rate if they qualify as a QFZP.
To be labeled as a QFZP, an ADGM entity must:
- Conduct qualifying activities (e.g., intra-free-zone trading, eligible exports, IP income).
- Avoid excluded activities (e.g., mainland real-estate transactions with natural persons).
- Satisfy the de minimis threshold for non-qualifying income.
- Maintain audited financial statements.
Even small or dormant companies that might otherwise be exempt from audit must submit audited accounts if they wish to maintain QFZP status.
Filing Corporate Tax Returns and Financial Statements for ADGM Companies
ADGM companies must follow both Registration Authority (RA) and Federal Tax Authority (FTA) guidelines.
The key responsibilities include
- Who must file: All private and public limited companies, except those explicitly exempt (e.g., RSCs, certain unlimited companies)
- What to file: IFRS-compliant financial statements, audited if the organization is a QFZP.
- When to file: For the financial year 2024, the deadline is 30 September 2025.
Importantly, IFRS prohibits the preparation of multiple general-reason financial statements. With this approach, an organization cannot prepare one set for ADGM and another for tax purposes. The same audited statements used for corporate tax must be submitted to the RA.
Transitional Relief for Small Companies
Recognizing the initial burden on small companies, the Registration Authority (RA) has issued a limited transitional relief:
- Applies only for the first financial year under corporate tax law
- Available only for companies that might in any other case be exempt under CR 2020 but are required to audit for UAE corporate tax compliance.
- Does not waive the future audit requirements and override the FTA’s powers
Companies must prepare for full compliance in subsequent years and should not transitional measure long-term
Importance of Using an ADGM Registered Auditor
All audits must be performed by an auditor registered with the ADGM. The RA keeps a public list of authorized auditors. Directors must officially appoint the auditor, and failure to do so renders the audit invalid.
Choosing a reliable auditor in UAE early guarantees your organization stays compliant and avoids delays in meeting the 30 September 2025 filing deadline.
Penalties for Non-Compliance
- Failing to conform with the ADGM audit requirements and financial statements filings can result in penalties from both the RA and the FTA:
- ADGM RA Penalties: Late filing fines, Rejection of faulty debts, director legal responsibility for misguided statements
- FTA Penalties: Loss of QFZP status (resulting in a 9% corporate tax), fines for non-compliance with the Corporate Tax Law
Note: ADGM relief measures do not protect companies from FTA enforcement actions.
Why Timely Compliance Matters
Complying with ADGM Corporate tax returns and audits is more than simply avoiding fines. It ensures:
- Maintaining the 0% tax benefits under the QFZP status
- Protecting directors from liability
- Building acceptance with investors, regulators, and partners
- Future-proofing your operations as enforcement tightens
Final Thoughts: What Should Companies Do Now?
As the 30 September 2025 deadline date approaches, ADGM companies running in ADGM should:
- Determine whether or not they qualify as a QFZP
- Ensure IFRS-compliant accounts are organized and audited.
- Appoint an ADGM-registered auditor early
- Understand if transitional relief applies—and if so, for how long
- File accounts and corporate tax returns for ADGM on time
Compliance is not optional. To enjoy the UAE’s beneficial tax benefits, companies must meet strict accounting and audit requirements.
Need Help?
If you are uncertain about the QFZP status of your ADGM company or require audit support, you can choose ebs Chartered Accountants. Our UAE-based experts handle the IFRS reporting, ADGM compliance, and corporate tax filing ensuring timely audit by protecting your 0% tax on Net profit.
FAQs
What is a QFZP in ADGM?
A QFZP (Qualifying Free Zone Person) is an ADGM entity eligible for a 0% UAE corporate tax rate if specific conditions are met.
Are audits mandatory for all ADGM companies?
Audits are mandatory unless the company qualifies for exemption, but QFZPs must be audited regardless of size.
What accounting standards must ADGM companies follow?
All ADGM companies must prepare financial statements in compliance with IFRS.
When is the filing deadline for ADGM financial statements?
The filing deadline for ADGM companies for FY2024 is 30 September 2025.