Financial Audit Requirement for IFZA

In the bustling business landscape of the UAE, the International Free Zone Authority (IFZA) stands out as a key player, offering businesses a range of incentives and opportunities. However, to maintain operational status, businesses must adhere to specific regulatory requirements. One crucial aspect is the submission of Audited Financial Statements when renewing an IFZA trade license, as mandated by Administrative Resolution No 001/2025.

Understanding the Financial Audit Requirement
According to Administrative Resolution No 001/2025, all IFZA licensees are required to submit Audited Financial Statements from their most recently completed financial year when applying for trade license renewal. This requirement is not only about compliance but also reflects a commitment to transparency, financial accuracy, and a disciplined approach to governance within businesses.

Objectives of Audited Financial Statements

Financial Verification
Audited Financial Statements provide an independent examination of a company’s financial records, ensuring credibility and accuracy.

Transparency
This enhances stakeholder trust, essential in attracting investments and maintaining strong business relationships.

Regulatory Compliance
Staying compliant with IFZA and local laws is crucial in avoiding penalties and ensuring uninterrupted business operations.

Informed Decision-Making
Regular audits provide insights that help businesses strategize, optimize spending, and identify growth opportunities.

Why a Financial Audit is Essential for License Renewal
When licensees possess Audited Financial Statements, they not only streamline their renewal process but also fulfill a wide range of business requirements. These documents can support various operational needs beyond compliance, making them an invaluable asset. For instance:

Loan Applications
Financial institutions often require audited statements to assess creditworthiness for business loans.

Investor Relations
Attracting new investors is easier with verified financial records, enhancing credibility.

Performance Monitoring
Audited statements act as a benchmark for financial performance over time, assisting in future planning.

IFZA Company Financial Statements and Reports Advisory

Navigating the complexities of financial audits can be challenging. NEX Consultants offers specialized services to help IFZA companies produce their Audited Financial Statements and ensure compliance with local regulations. Here’s how they can assist:

Comprehensive Financial Statement Preparation
NEX Consultants brings a team of qualified accountants and financial analysts to help prepare accurate and compliant financial statements. Their expertise ensures that the documentation aligns with the International Financial Reporting Standards (IFRS) as well as any specific requirements mandated by IFZA.

Conducting Financial Audits
NEX Consultants provides professional audit services conducted by certified public accountants (CPAs) who adhere to the highest standards of auditing practices. This independent review safeguards the integrity of financial statements and contributes to the quality of financial governance.

Assistance with Regulatory Compliance
Staying compliant with the regulations set out by IFZA can sometimes be daunting. NEX Consultants will help businesses understand their obligations, particularly concerning the submission of audited reports. They ensure that all criteria are met timely and accurately.

Insightful Recommendations
Beyond providing standard auditing services, NEX Consultants offers strategic advice based on audit findings. This may include recommendations on financial management, operational efficiency, cost control, and areas for potential growth.

Support in Gathering Necessary Documentation
Compiling the necessary documents for an audit can be overwhelming. NEX Consultants assists licensees by organizing and gathering required financial records, streamlining the audit process, and enhancing overall efficiency.

Timely Filing and Follow-up
With deadlines for trade license renewals fast approaching, NEX Consultants helps ensure that all financial statements and accompanying documentation are filed punctually, mitigating any risk of delays that could jeopardize a business’s operational capacity.

Steps for Companies to Renew Trade License with NEX Consultants

1. Initial Consultation
Schedule a meeting with NEX Consultants to discuss your specific requirements, timelines, and the scope of their services.

2. Financial Data Collection
Collaborate with your team to gather all relevant financial data for the auditing process. NEX Consultants will provide a checklist to ensure nothing is overlooked.

3. Audit Process
Allow NEX Consultants to conduct the audit, during which they will thoroughly analyze financial records, ensuring accuracy and compliance.

4. Receiving Audited Financial Statements
Upon completion of the audit, NEX Consultants will provide you with the Audited Financial Statements, ready for submission with your trade license renewal application.

5. Filing and Compliance Check
NEX Consultants will assist in filing the necessary documents with IFZA, ensuring compliance and addressing any potential issues that may arise.

Renewing an IFZA trade license involves meeting specific financial audit requirements, as established by Administrative Resolution No 001/2025. The submission of Audited Financial Statements is not just a regulatory obligation; it also strengthens a business’s integrity and financial health. Partnering with NEX Consultants can streamline this process, ensuring that businesses comply with all financial regulations while also gaining valuable insights into their operations. This partnership can be crucial in fostering sustainable growth and success within the competitive landscape of the UAE. By taking the necessary steps and leveraging expert assistance, IFZA companies can confidently secure their licenses and continue thriving in the dynamic market.

FREQUENTLY ASKED QUESTIONS FOR IFZA LICENSE RENEWAL AND FINANCIAL AUDITING

Who is required to submit Financial Statements as part of the renewal process?

All IFZA licensees (an FZCO or Branch)

When must the Financial Statements be submitted to IFZA?

Effective from the 30th of September 2025, a company will need to submit their Financial Statements during the renewal of their trade license. This submission will be required on an annual basis, during the process of trade license renewal . Companies that renew their license before the 30th of September 2025 will not be required to submit Financial Statements as part of the renewal process However, submission will be required for the subsequent trade license renewal.

What period should the Financial Statements cover?

The Financial Statements should cover the most recently completed financial year as of the trade license renewal date.

How can a company verify its financial year?

All companies are required to determine the financial year they would like to follow when they incorporate the company. A company’s financial year is stipulated in theArticles of Association (“AOA”) of the company (refer to Section 75 of the AOA).

What accounting standard should be used for the Financial Statements?

In line with UAE Corporate Tax Law requirements, the following standards apply:
Annual turnover for the financial year is AED 3 million or less = CASH BASIS of accounting
Annual turnover for the financial year is greater than AED 3 million, but less than AED 50 million = IFRS for SME’s
Annual turnover for the financial year is more than AED 50 million = IFRS

What format is expected for the Financial Statements?

For companies that meet both of the below criteria, a Simplified Financial Statement will be required to be submitted:
A. The annual turnover for the completed financial year is equal to or below AED 3 million
B. Nine employees or fewer at any point during the completed financial year If either of the above criteria is not met, full Audited Financial Statements are required to be submitted

How is “employee” defined for the criteria in FAQ 6?

An employee is defined as any individual performing work or services under an executed Employment Contract – whether directly sponsored or otherwise – provided they operate under the company’s supervision and contribute to its business operations.

What is the definition of turnover?

Turnover means the gross amount of income derived during a financial year. Turnover should be determined based on the market related principles (similar to those applied for UAE Corporate Tax Law). When determining the turnover, the income from all business activities undertaken by a company must be included.

Is there a template for the Simplified Financial Statements?

Yes – refer to the following link for the template: Simplified Financial Statement preview : https://cdn.ifza.com/marketing/Simplified_Financial_Report%28Final%20Version%29%20%201%20%281%29.pdf
To benefit from submitting a Simplified Financial Statement, the IFZA-provided template must be used (no other format will be accepted).

When must Audited Financial Statements be submitted?

If a company does not meet the criteria for a Simplified Financial Statement (see FAQ 6), then Audited Financial Statements are required.

Is any registered auditor permitted to prepare and submit the Audited Financial Statements?

Any registered UAE auditor may be used for the preparation of Audited Financial Statements.

Are the Financial Statements required to be signed?

Yes, the Financial Statements are required to be electronically signed by the authorized signatory (Manager, Director or Shareholder).

How should Financial Statements be submitted to IFZA?

The Financial Statements will need to be submitted via the electronic form which will be shared during the Renewal process.

If an audited report has already been prepared for the (Federal Tax Authority) FTA for the most recently completed financial year, can it used for the IFZA renewal?

Yes, if audited reports are available, they may be submitted for the IFZA license renewal.

Financial Audit Requirement for IFZA Company License Renewal