How does Audit work for Free Zone companies in Dubai and Abu Dhabi?
There are several free zones in all the seven emirates. These free zones are special designated zones, having different tax rates, special taxes, and custom and import regime. These zones are guided by special laws, rules and regulations.
The Trade Free Zones in Dubai are:
- Dubai Airport Free Zone
- Dubai Biotechnology & Research Park
- Dubai Gold and Diamond Park
- Dubai International Financial Centre
- Dubai Motor City
- Dubai Flower Centre
- Dubai Healthcare City
- Dubai Internet City
- Dubai Knowledge Village
- Dubai Maritime City
- Dubai Multi Commodity Centre
- Dubai Silicon Oasis
- Dubai Logistics City
- Dubai Media City
- Dubai Outsource Zone
- Dubai Studio City
- Dubai Sports City
- Enpark International Humanitarian City
- International Media Production Zone
- Jebel Ali Free Zone
- Techno Park
- Dubai South Free Zone
- Dubai Industrial City
- Dubai Logistics City
- Dubai Academic City
The businesses in these free zones enjoy some exemptions listed below:
- 100% foreign ownership of the enterprise.
- 100% import and export tax exemptions.
- 100% repatriation of capital and profits.
- Corporate tax exemptions for up to 50 years.
- No personal income taxes.
- Assistance with labor recruitment & additional support services.
Businesses that are registered under the trade free zones and hold the trade license are required to get their annual financial statements audited at the time of renewal of trade licenses. A company can choose its own financial year as per their requirement, but by default it is calendar year. The chosen financial year should commence from the date of incorporation and must neither be less than 6 months nor more than 18 months.
Periodic Audit of the financial statements of the businesses in the Free Zones is mandatory and failing to comply with this may lead to penalties. In order to avoid the fines and penalties, the audit in the free zone needs to be conducted timely. The current requirement is to submit the reports to the authorities within 90 days of a Free Zone Company’s financial year-end. Free Zone Companies may be subject to an AED 5,000 financial penalty for every month that an audited financial report is pending.
Free Zone Companies can by all means maintain their own financial statements. However, these financial records need to be independently verified by the auditors that are approved by the Free Zone Authorities before they can be submitted. The financial statements need to be audited at the time of renewal of the trade licenses; it is advisable for the businesses to maintain a chronological record of all the financial transactions.
You should choose the best auditors in Dubai and that can help you in most free zones in the Dubai and provide the annual report in the same manner as it is required by the free zone. Such team is well versed with the laws and regulations of these zones and can help you with all your needs.
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