Are you prepared for Corporate Tax Return Filing in the UAE?
Tax season is upon us, but don’t let the thought of corporate tax returns send you into a spiral of spreadsheets and stress. Imagine it like running a race—you just need a clear route, a steady pace, and the finish line in sight. Whether you’re new to the UAE’s tax landscape or a seasoned pro, having a solid game plan transforms this task from overwhelming to achievable. Let’s break it down step by step, so you can cross that filing finish line with confidence.
Corporate Tax Return Filing in the UAE
On January 31, 2022, the tax environment in the UAE experienced another fiscal change when the Ministry of Finance and FTA declared the introduction of a new federal corporate tax in the UAE, effective from the fiscal year beginning June 1, 2023. This action is vital in strengthening the UAE’s position as an international business and finance center while decreasing dependence on oil and gas for sustainable growth, in line with the country’s strategy. The government of the UAE seeks to generate tax revenue that will establish a safety net and support a more stable economy. The UAE government needed to gather all trustworthy information from the unedited markings.
Federal Decree-Law No. 47 of 2022 provided for the introduction of corporate tax through FTA in the United Arab Emirates. Its implementation took effect for the fiscal year commencing on June 1, 2023. Those with a December 31 fiscal year-end commenced their corporate tax year on January 1, 2024. The UAE puts the Corporate Tax regime at 9% on income over AED 375,000. Small business entities were exempted, with earnings less than AED 3 million.
Key Aspects of Corporate Tax in the UAE:
Tax For Mainland Companies:
- For income up to AED 375000, Corporate Tax Rate is charged at 0%.
- For income above AED 375000, Corporate Tax Rate is charged at 9%.
Tax Rate for Free Zones
- For Qualifying Income of Qualifying Free Zone, Corporate Tax Rate is charged at 0%.
- For Non-Qualifying Income of Qualifying Free Zone, Corporate Tax Rate is charged at 9% (flat Rate without threshold benefit)
- Income of Non-Qualifying Free Zone, Corporate Tax Rate is charged at 9% (with threshold benefit of AED 375000)
Corporate Tax Return
The implementation of corporate taxes in the UAE has made businesses accountable for several new administrative responsibilities. Among these, the duty to submit yearly Corporate Tax Returns and pay any outstanding tax obligations is important. Submitting these returns is a legal requirement for businesses functioning in the UAE, and non-adherence can result in significant penalties and fines.
A Corporate Tax Return, in the simplest of words, is a report submitted by businesses to the Tax Authority. It outlines the income received in the financial year along with all the expenses that were incurred in generating that income. That way, the determination of Net Income, or Taxable Income, becomes possible.
The Corporate Tax Return Filing in the UAE is mandatory and, at the same time, highly crucial for financial health. This prevents penalties and proper management of cash flows while maintaining market credibility.
Timeline for Corporate Tax Filing in the UAE
Corporate Tax Returns are submitted once for each Tax Period. Typically, a company’s Tax Period refers to its Financial Year or a portion of it during which a Tax Return must be submitted. A Person’s Financial Year typically corresponds to the Gregorian calendar year, or the 12-month timeframe during which the Taxable Person creates financial statements.
Corporate Tax Law is relevant to Tax Periods starting on or after June 1, 2023. Additionally, the due date for submitting Corporate Tax Returns is nine months after the conclusion of the Tax Period. This indicates that any business that implements a financial year beginning on 1 June 2023 and ending on 31 May 2024 will fall under Corporate Tax Law effective from 1 June 2023. As a result, the initial tax return submission in this scenario is expected to be required within 9 months, specifically by February 2025.
Nonetheless, for a company that has its Financial Year and Tax Period spanning from January to December, the initial Year of Corporate Tax applicability for that company would be from 1st January 2024 to 31st December 2024. Consequently, the obligation for filing the First Corporate Tax Return for this company would be due within 9 months, specifically by September 2025.
| Financial Year-End Date | Tax Period Start Date | Tax Period End Date | CT Return and Payment Due Date |
| December 31, 2024 | January 1, 2024 | December 31, 2024 | September 30, 2025 |
| March 31, 2025 | April 1, 2024 | March 31, 2025 | December 31, 2025 |
| June 30, 2025 | July 1, 2024 | June 30, 2025 | March 31, 2026 |
| September 30, 2025 | October 1, 2024 | September 30, 2025 | June 30, 2026
|
| December 31, 2025 | January 1, 2025 | December 31, 2025 | September 30, 2026 |
Businesses With Financial Year Less Than 12- months
Under the Commercial Companies Law, a company’s first Financial Year need not be 12 months as usual but must fall within a range of at least 6 months up to a maximum of 18 months. From then onwards, the Financial Years will comprise consecutive periods, each being 12 months and starting immediately after the end of the previous Financial Year. This is related specifically to newly formed companies wherein the financial operations have the flexibility to coincide according to the calendar year.
Checklist For Corporate Tax Return Filing in the UAE
| Task | Description | Reference |
| Determine Residential Status | Determine whether your business is a Resident or Non-Resident Taxable Person to know what tax obligations apply. | Section 5.3 and 5.4
|
| Determine Taxable Income
|
Calculate your business taxable income, taking into account any available exemptions or deductions. | Section 4.2
|
| Register for Corporate Tax | Register your business with the Federal Tax Authority (FTA) for corporate tax purposes. | Section 5.7.6
|
| Maintain Accurate Records | A detailed record of financial activities should be maintained to support the tax return, including income and expenses and financial statements. | Section 5.7.6
|
| Preparation of Financial Statements | Prepare financial statements following the adopted accounting standards. | Section 5.7.6
|
| Tax Return Filing | Prepare and file the corporate tax return for the year 2025 within the due date set.
|
Section 5.7.6
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| Payment of Tax Liability | Compute and pay the amount of corporate tax if any that is due and payable before the payment deadline so as not to attract penalties. | Section 5.7.6
|
| Review Free Zone Status | If conducting activities in a Free Zone, ensure you are eligible for any type of tax relief and comply with all rules and regulations | Section 5.5
|
| Check for Exemptions | Ensure you qualify for exemptions and the required notifications or applications have been made | Section 5.7
|
| Stay Updated on Tax Laws | Regularly review updates to the UAE tax laws and guidelines | Section 2.4
|
The requirements for Corporate Tax Return Filing in the UAE and its compliances need to be known and followed by companies in the UAE. The requirements of tax registration, record keeping, and submitting the tax return on time with the penalties imposed for not following these reflect careful management of taxes. Careful management not only ensures legal compliance but also avoids significant penalties.
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FAQs
- Can businesses claim deductions for expenses?
Yes, businesses are allowed to claim deductions for eligible business expenses, as long as they meet the conditions stipulated in the UAE Corporate Tax Law. Common deductions include employee wages, operational costs, and costs related to business activities.
- What are the penalties for late filing or non-payment of Corporate Tax?
Penalties for late filing or non-payment of Corporate Tax may include fines of up to 300% of the unpaid tax amount, as well as other administrative penalties as defined by the UAE Federal Tax Authority.
- Are there any rules for transfer pricing?
Yes, businesses involved in cross-border transactions must comply with transfer pricing rules, which require them to document and report related party transactions according to UAE regulations.
- What records must be maintained for Corporate Tax purposes?
Businesses must maintain accurate financial records, including but not limited to income statements, expense records, and transaction documentation to support tax filings.
