When venture‑capital or corporate investors ask for audited financials, the first thing your auditor will want to know is: “Will you report under IFRS or Local GAAP?” Choosing the right framework early prevents costly re‑work and avoids surprises that can stall due‑diligence.

1. The Two Main Paths

IFRS (International Financial Reporting Standards) is set by the IFRS Foundation and the IASB. It is the default framework in the UAE, Qatar, Bahrain, and most free‑zones. Global investors love it because it makes cross‑border comparisons effortless.

Local GAAP is issued by each country’s accounting authority—for example, SOCPA in Saudi Arabia or the UAE’s simplified corporate‑tax regime for very small entities. It usually aligns more closely with domestic tax filings and can involve lighter disclosures for micro‑companies.

If you are a growth‑stage startup, consider IFRS for SMEs. It offers the credibility of IFRS with reduced disclosure obligations that suit private companies.

2. What Investors Expect

• International VCs and free‑zone funds typically insist on full IFRS (or IFRS for SMEs) so they can benchmark performance across their global portfolio.

• Local angel syndicates will often accept Local GAAP, provided you supply a brief reconciliation that bridges headline numbers to IFRS.

• Family offices and corporate strategics prefer whatever framework they themselves use—often IFRS in the UAE and Qatar, but SOCPA for Saudi‑based groups.

The bottom line: the more international your investor base, the stronger the case for IFRS.

3. Key Regulatory Triggers (2025 Updates)

• United Arab Emirates – Ministerial Decision 84 of 2025 states that any taxable person with revenue above AED 50 million must file audited, IFRS‑compliant financial statements with their corporate‑tax return.

• Saudi Arabia – Local entities must use SOCPA, but foreign‑owned subsidiaries have moved to IFRS. ZATCA requires audited financials within 120 days of year‑end.

• Qatar Financial Centre – Mandates IFRS or IFRS for SMEs for all authorised firms, regardless of size.

• Bahrain – IFRS is the default; audits become compulsory once turnover exceeds BHD 100 thousand.

If you operate from DIFC, ADGM, or QFC, start with IFRS from day one. Mainland Saudi entities can launch on SOCPA but should plan for IFRS if cross‑border expansion is on the horizon.

4. Decision Checklist for Founders

1. Investor Roadmap – Are you courting local angels or global VCs?

2. Expansion Plans – Will you operate in several GCC states or stay in one market?

3. Compliance Costs – IFRS audits cost about 10–20 percent more today but eliminate future conversion headaches.

4. Talent & Tools – Does your finance stack (Xero, QuickBooks, Zoho Books) produce IFRS‑ready reports?

5. Exit Horizon – IPOs on Tadawul or Nasdaq Dubai will require IFRS.

Rule of thumb: If you expect to raise USD 5 million or more, or to operate in two or more GCC markets within the next two years, adopt IFRS now and avoid a painful mid‑flight switch.

5. Making the Switch from Local GAAP to IFRS

A phased approach minimises disruption:

Month 1 – Gap Analysis: Map every accounting policy against IFRS requirements—revenue recognition, lease accounting, foreign‑currency treatment, and so on.

Month 2 – Policy Drafting: Approve a new accounting manual and train the finance team.

Month 3 – Opening Balance Sheet: Restate retained earnings and document key judgments.

Months 4‑6 – Parallel Runs: Produce statements under both frameworks until auditors sign‑off on the new IFRS set.

Cloud ERPs with multi‑GAAP capability make life easier, and an external advisor (like E Advisory) can accelerate tricky areas such as IFRS 16 leases.

6. Final Word

The “right” framework is the one that aligns with your growth plans, investor mix, and local regulations. For MENA founders seeking regional or global capital, IFRS—or IFRS for SMEs—usually pays dividends in valuation credibility and exit flexibility.

Need help sizing costs, timelines, or the audit impact of switching? E Advisory has guided dozens of Gulf startups through IFRS adoption without derailing fundraising schedules.