Category | Mainland | Free Zone | ADGM, DIFC |
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Audit Requirement | Annually. Federal Decree-Law No. 32 of 2021 "On Commercial Companies" | Depends on the free zone | Mandatory |
Regulators | FTA, banks, licensing authorities | Free zone administration | Registration authority |
Sanctions | Warning, fines from 10,000 AED | Refusal to renew license | Sanctions from administrations and regulators |
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Mainland (Mainland UAE)
According to Federal Law No. 32 of 2021 (Commercial Companies Law), all Mainland companies (e.g., LLCs) are required to:
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Prepare financial statements annually in accordance with international standards (IFRS),
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Appoint an auditor and undergo an annual audit.
Important: Although the financial statements are not automatically submitted to government authorities, companies are required to retain accounting books for at least 5 years. The introduction of corporate tax has made audits particularly relevant: the report may be requested by the tax authority (FTA) during audits and for verifying the data provided in tax returns.
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Free Zones
Mandatory audit submission:
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DMCC (Dubai Multi Commodities Centre): Audit report must be submitted within 180 days after the end of the financial year. Without this, the license cannot be renewed.
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JAFZA (Jebel Ali Free Zone): Annual audit submission is required (especially for FZE/FZCO companies).
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Dubai South, Meydan Free Zone: These zones also require an annual audit.
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Financial Centers: DIFC and ADGM
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DIFC (Dubai International Financial Centre) and ADGM (Abu Dhabi Global Market): These are special legal zones with international regulatory standards. The reporting requirements here are the most stringent:
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Companies must prepare audited financial statements annually.
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The report must be submitted via the registrar’s portal within the established deadlines (usually within 6 months after the end of the year).
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Failing to meet deadlines results in fines, license suspension, and other sanctions.
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There is also separate regulation for financial institutions, including funds, banks, consultants, etc.
Audit is also mandatory in other cases:
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Branches of foreign companies: Required by law and the corporate requirements of the parent company.
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Company liquidation: The last audited report must be provided.
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Credit and investors: It is extremely difficult to obtain financing or attract partners without an audit.
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Banking services: Banks increasingly request audit reports for opening or maintaining accounts.
What happens if the audit is not completed?
Failure to comply with audit requirements may result in:
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Refusal to renew the company’s license,
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Fines for late submission (in some zones, starting from 2,000 AED and higher),
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Suspension of operations until violations are rectified,
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Issues with submitting tax returns or during tax audits.
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