In August 2025, the boardroom of ZIA Holdings, a family-owned group based in Abu Dhabi, was tense. The group had grown over three decades, branching into logistics, trading, and manufacturing. Five subsidiaries and the parent company had formed a tax group in 2024 to simplify corporate tax compliance.
The CFO, Rashid, had always liked the arrangement. “We file one tax return instead of six,” he told the family board. “It keeps things neat.”
But that morning, Rashid brought a new challenge. He laid a copy of Ministerial Decision No. 7 of 2025 on the table. The document explained that from 2025 onwards, every tax group would need to prepare special purpose financial statements.
“What does that mean?” asked the chairman, the eldest son of the founder.
Rashid explained. Under the original law, Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, groups could pool their results if the parent held at least 95% of the subsidiaries, among other conditions. The parent then filed one corporate tax return on behalf of all members. But until now, the requirement for consolidated reporting was flexible.
The new decision changed that. “The FTA wants special purpose financial statements prepared for the entire tax group,” Rashid said. “They want consistency. Every subsidiary must use the same accounting policies, and we must eliminate intercompany transactions properly. If one company joins or leaves the group mid-year, we need to show that too.”
The logistics director shifted uneasily. His subsidiary used slightly different accounting treatments for leases compared to the manufacturing arm. “We’ll have to align everything,” he admitted.
Rashid nodded. “Yes. And there’s something more detailed in Article 3(3) of the decision. It sets strict rules about how we handle acquisitions and business combinations.”
He outlined the provisions:
- No IFRS 3 or IFRS 10 consolidation effects
If a group member acquired another company, any goodwill or adjustments booked under IFRS 3 or IFRS 10 must not be included in the special purpose financial statements. - Exclude goodwill, bargain purchase gains, or fair value adjustments
Even if they appear in consolidated IFRS reports, they must be stripped out when preparing the aggregated financials for the tax group. - Exception for asset acquisitions
If the group acquires assets directly, rather than an entire legal entity, then those assets and related adjustments stay in the acquiring company’s standalone accounts and are included in the aggregation.
He gave a practical example. “When our logistics arm bought a fleet of trucks directly, that was an asset acquisition. The trucks and related entries belong in the aggregated report. But when our manufacturing subsidiary acquired a smaller company last year, the goodwill and consolidation adjustments under IFRS 3 must be excluded. That’s the difference Article 3(3) is pointing out.”
At first, the family board looked overwhelmed. But as Rashid continued, they realized the logic: these provisions prevented double counting, inflated assets, or artificial income in the tax group’s filings.
Over the next months, the finance team worked late nights. They created a new consolidation process aligned with IFRS standards. Each subsidiary reclassified costs to ensure consistency. Intercompany sales of raw materials were identified and eliminated from the statements. Even small transfers between group companies were carefully documented.
By December 2025, ZIA Holdings had produced its first set of special purpose financial statements under the new rules. When they reviewed the numbers, the family realized something surprising: the process gave them a real view of the group’s profitability than they had ever seen. For the first time, they could track exactly where cash flow was strong and where margins were thin.
When the filing deadline came in 2026, Rashid felt confident. If the FTA asked questions, the group had evidence ready. Unlike smaller competitors who ignored the new rule and scrambled later, ZIA had turned compliance into an advantage.
The family group learned that special purpose financial statements were more than a compliance burden. By carefully applying the new rules and aligning their processes early, they avoided penalties, gained clarity, and built trust with the regulators. Compliance gave them a competitive edge.
Disclaimer
The Federal Tax Authority may issue further guidance on how these statements must be prepared, presented, and submitted. The interpretation of provisions, including Article 3(3), remains subject to clarification. The information above is for general understanding only and does not replace professional advice.
