Free Zone Audit … Is It Really Important?

In the United Arab Emirates, there are specially designated zones which are called free zones. These are the zones that have a special tax, customs, and imports regime. There are special laws, rules, and regulations that are specifically designed and prepared for the functioning of these free zones.

The United Arab Emirates has multiple free zones in all seven emirates. Below are the exemptions that a free zone offers to the businesses which are set up in these designated areas:

• 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 such as sponsorship and housing

Businesses that are registered under the trade free zones and hold the trade license issued by the free zones, require their annual financial statements to be audited at the time of renewal of their trade licenses. As the financial year in the UAE, is the calendar year. A company can choose its own financial year as per its requirement. But that chosen financial year should commence from the date of incorporation and must not be less than 6 months and no more than 18 months.

Annual audit of the financial statements of the businesses registered in the Free Zones is mandatory and the failure to comply with this regulation may lead a registered business to be penalized with a hefty fine. In order to avoid the fines and penalties, the audit in the free zone needs to be conducted. ARC Associates is one of the leading and best auditors in the UAE and we are registered with all the major free zones in the UAE and provide the annual report in the same manner as it is required by the free zone.

As ARC Associates is registered with the free zones, the team is well versed and qualified to handle the audit as per the regulations and compliance requirements of the free zones.

As the financial statements need to be audited at the time of renewal of the trade licenses, it is advisable for the businesses to maintain and keep a chronological record of all the financial transactions. ARC Associates not only offer auditing services but also provide bookkeeping and accounting services of the businesses that help to maintain the accounts correctly and on a timely basis.