IntrIntroduction
Corporate Tax was introduced in the UAE on June 1, 2023, aligning with the nation’s long-term economic vision and overall growth objectives. Businesses operating in the UAE must comply with these regulations to avoid penalties and ensure timely and accurate filings.
This guide provides a comprehensive walkthrough for businesses on filing Corporate Tax returns effectively.
Step 1: Determine Corporate Tax Eligibility
Understanding eligibility for Corporate Tax is crucial. Here’s how you can confirm your status:
- Applicable Entities:
- Resident juridical persons.
- Non-resident persons with a permanent establishment or income sourced in the UAE.
- Qualifying Free Zone persons, including offshore companies.
- Natural persons conducting business activities under specific conditions.
If your business qualifies for exemption, ensure the registration reflects this status. Consulting a professional tax advisor is highly recommended to confirm eligibility.
Step 2: Register for Corporate Tax
Registering for Corporate Tax with the Federal Tax Authority (FTA) is mandatory. Follow these steps:
- Prepare Documents: Trade license, incorporation certificate, UAE IBAN, and shareholder identification documents.
- Log in: Access the EmaraTax portal.
- Complete Registration: Navigate to the Corporate Tax section, fill in the required details, and upload documents.
- Obtain TRN: Receive your Tax Registration Number (TRN) upon approval.
Proper record-keeping as per International Financial Reporting Standards (IFRS) is vital for compliance.
Step 3: Identify Your Tax Period
- Default Period: Most businesses align with the Gregorian calendar (January 1 – December 31).
- Custom Period: Businesses can apply for a custom financial year via the FTA portal.
Example:
For a financial year ending December 31, 2024, the Corporate Tax return deadline will be September 30, 2025.
Step 4: Prepare Financial Statements
Businesses must maintain accurate financial records for at least seven years post-tax period. Key components include:
- Income Statement (Profit and Loss).
- Balance Sheet.
- Cash Flow Statement.
Ensure compliance with UAE’s IFRS standards and seek professional assistance if needed.
Step 5: Calculate Taxable Income
Taxable income includes total income after adjustments, deductions, and exemptions.
- Free Zones:
- Qualifying income: Taxed at 0%.
- Non-qualifying income: Taxed at 9%.
Accurate classification of income types is essential.
Step 6: Review Available Tax Reliefs
Eligible businesses can avail of the following reliefs:
- Small Business Relief: Applicable for annual turnover < AED 3 million (valid until December 2026).
- Group Taxation Relief: For companies forming a tax group.
- Business Restructuring Relief: For qualifying mergers or restructuring.
Prepare relevant documentation for claiming reliefs.
Step 7: Prepare and Upload Required Documents
Documents required for filing include:
- Financial statements.
- Tax loss schedules.
- Related party transaction schedules.
- Tax credit documentation.
Ensure the accuracy of all documents.
Step 8: Complete Corporate Tax Return Filing
- Log in to the EmaraTax portal.
- Access the Corporate Tax Return section.
- Provide details and upload necessary documents.
- Review and submit.
Step 9: Pay Corporate Tax Liability
Payment options:
- Bank transfer.
- EmaraTax payment portal.
- eDirham.
The payment deadline aligns with the tax return filing deadline (9 months after the financial year ends).
Step 10: Maintain Records for Audit
Businesses must maintain the following records for at least seven years:
- Financial statements.
- Invoices and receipts.
- Bank statements.
- Contracts and payroll records.
Proper documentation ensures smoother audits and compliance with FTA regulations.
Common Pitfalls to Avoid
- Late registration or filing.
- Incorrect tax filings or relief claims.
- Failure to maintain proper records.
Conclusion
Timely and accurate compliance with UAE Corporate Tax regulations not only avoids penalties but also supports business growth. Maintaining organized records, understanding relief options, and leveraging expert advice are key to seamless tax management.
Flying Colour Tax Consultant LLC specializes in helping businesses with tax registration, filings, and optimization, ensuring full compliance with UAE laws.
Book a free consultation with our experts today to simplify your tax journey.
Disclaimer: This blog is for informational purposes only and does not constitute professional tax advice.