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Corporate Tax Filing

Corporate Tax Filing refers to the specific aspects and components that are covered within the process of filing corporate tax returns.

Corporate Tax Filing

Corporate tax return filing is a legal requirement for companies operating in the UAE, and failure to file tax returns can result in penalties and fines. UAE corporate tax law is announced and companies are preparing to file corporate tax returns within the given time by the Federal Tax Authority (FTA).

Corporate Tax was first introduced in January 2022 by the Ministry of Finance, UAE, thus declaring the implementation in June 2023 or by January 2024. The Corporate Tax Law will go into effect on June 1, 2023, with a headline rate of 9%. Any annual taxable profits under AED 375,000 are subject to a 0% rate. The regime incorporates elements that are best practices in international taxes.

Every Taxable Person must register for Corporate Tax and obtain a Tax Registration Number. In some cases, the tax authority requests the Exempt Persons also to register for Corporate Tax.

Guide to UAE Corporate Tax Filing

Like VAT, UAE companies must register with the Federal Tax Authority to receive a Corporate Tax Registration Number. 0% tax rate and exempt persons may also be required to get a Tax Registration number.

The Tax return must be filed nine months after the relevant Tax Period under the Gregorian calendar of 12 months.
The Corporate Tax Payable for the tax period. In the case of a parent company, it must file corporate tax on behalf of the group.
The financial statement submission must include the period of the statements and the accounting standard used for reporting. It must highlight the taxable income for the tax period as per the financial statements. For a partnership business, the total assets, liabilities, income, and expenditure of an unincorporated partnership show the partner’s share.
Following tax schedules must be included while filing corporate tax in the UAE.
The exact amount of tax relief claimed under Article 37, clause 1. The article States that the Tax loss can be offset against the Taxable Income for the subsequent period until there is taxable income in the future tax periods.
The amount of Tax Loss transferred under Article 38 of the Federal Law Decree Law No-47 of 2022, where the TAX Loss can be transferred to taxable entities where they are a minimum of 75% direct or indirect ownership interest in the tax loss entity
Similarly, Tax credits are claimed under Article 46 & Article 47 of the same law.

Is it Mandatory To File Corporate Tax Returns in UAE?

Yes, it is mandatory to file Corporate Tax returns in the United Arab Emirates (UAE). The Federal Tax Authority (FTA) requires companies operating in the UAE to file tax returns and pay taxes on their taxable income as per the UAE tax laws. However, only 0% tax will be subjected for businesses with income less than AED 375,000.

The tax laws in the UAE apply to both local and foreign companies operating in the country, and failure to file tax returns or pay taxes can result in penalties and fines.

Should UAE businesses with no income file for CT returns? All Taxpayers are required to file a Corporate Tax return, irrespective of the income level or the status of the company.

Should Free Zone entities file for Corporate Tax Returns?

Corporate Tax in UAE is imposed on Free Zone Persons as well. Hence, All Free Zone entities will be required to file a Corporate Tax return, even if they are Qualifying Free Zone persons or not.

How often Businesses should file for Corporate Tax Returns in UAE?

UAE Businesses will be required to file for corporate tax returns only once per the tax period. The CT return is apparently due nine months after the Tax Period has ended. Also, No advance or preliminary corporate tax filings are necessary.

Required for Corporate Tax Returns

  • Financial records
  • Taxable income calculations showing changes in the net result in accounting
  • Records and Plans for devaluation of tax
  • Transfer Pricing records
  • Information on transactions that involve relatives
  • Movement of Provisions

How to File Corporate Tax Returns in UAE?

You can file Corporate Tax Returns online through the EmaraTax portal. Currently, the FTA approves the pre-registration of corporate tax for selected entities. If you are one, you can register for corporate tax in EmaraTax. Have not created an account on EmaraTax? Here’s a guide to log in and register into EmaraTax. EmaraTax merged with the UAE Central Bank and UAE PASS to reorganize the user experience.

Why has UAE Introduced Tax on Corporate Income?

The introduction of taxes on corporate income in the UAE serves several important purposes.

  1. Enhance UAE’s Status and Reputation as a top Business Destination
    It aims to enhance the country’s status as a leading commercial and investment destination. By adopting taxation policies like those found in other developed economies, the UAE can offer greater transparency and stability to investors, making it an even more attractive place to do business.
  2. Accelerate UAE’s Development and Strategic Objectives
    In addition to attracting investment, the introduction of taxes on corporate income can help accelerate the country’s development and achieve strategic objectives. The revenue generated from corporate taxes can be used to fund critical infrastructure projects and public services, which can benefit both businesses and residents of the UAE.
  3. Comply with Global Tax Standards and Promote Transparency
    The implementation of corporate taxes is also in line with international standards of tax transparency. The UAE has committed to working with other countries to improve global tax practices and reduce the risk of tax evasion and other harmful practices. By introducing corporate taxes, the UAE is demonstrating its commitment to being a responsible and compliant member of the international community.
  4. Eliminate Harmful Tax Practices
    Another key benefit of corporate taxation is the elimination of harmful tax practices. In the past, some companies in the UAE may have used tax loopholes or other strategies to avoid paying their fair share of taxes. The introduction of corporate taxes helps to level the playing field and ensures that all businesses are contributing their fair share to the economy.
  5. Reduce UAE’s Reliance on Oil Revenue
    Finally, the introduction of corporate taxes is intended to reduce the UAE’s reliance on oil revenue. As the country looks to diversify its economy and develop new sources of income, corporate taxes can help to create a more sustainable revenue stream that is less dependent on fluctuating oil prices. By reducing its dependence on oil, the UAE can build a more resilient and robust economy that is better equipped to withstand economic challenges in the future.

Deadline For Corporate Tax Return Filing in UAE

Businesses in the UAE will have up to 9 months from the end of the relevant tax period to submit their tax return and pay the Corporate Tax to the Federal Tax Authority (FTA). For example, a company with a first tax period beginning on June 1, 2023 will have a deadline up to February 28, 2025, whereas a company with a first tax period beginning on January 1, 2024 would have a deadline up to September 30, 2025.

This move is based on the UAE’s dedication to ensuring the smooth implementation of Corporate Tax policy. Benefits of filing corporate tax returns include efficient cost and proper control of time, a single tax return for a group, and the ability to combine the amount of group tax paid, wherein certain companies make a taxable profit while others may have a tax loss.

Frequently Asked Questions

The deadline for corporate tax filing can vary depending on the jurisdiction and the fiscal year-end of the business. In many countries, the deadline is typically a fixed number of months after the end of the fiscal year. It is essential to consult the tax authority or a tax professional to determine the specific deadline applicable to your business.

Calculating your company’s tax liability involves determining the taxable income by subtracting eligible deductions, credits, and allowances from the business’s total income. The applicable tax rates are then applied to the taxable income to calculate the tax liability. Consulting with a tax professional or accountant is recommended to ensure accurate calculations.

Late filing or errors on the corporate tax return can result in penalties or interest charges. The specific penalties and interest rates vary by jurisdiction and depend on factors such as the amount of tax owed, the length of the delay, and the presence of negligence or intentional misconduct. It is important to file your tax return on time and accurately to avoid penalties.

It is crucial to maintain accurate and organized records to support the information reported on your corporate tax return. This includes financial statements, receipts, invoices, bank statements, payroll records, and any other documents relevant to your business’s income, expenses, and deductions. Retain these records for the required period, as specified by the tax authority in your jurisdiction.

Yes, it is highly recommended to seek the assistance of a tax professional or accountant with expertise in corporate taxation. They can help ensure accurate tax calculations, compliance with applicable tax laws, timely filing, and provide guidance on deductions, credits, and any tax incentives or allowances available to your business.