A Guide to Corporate Tax Return Filing in UAE

Corporate tax in the UAE is a topic that many business owners may not fully understand. With the implementation of corporate tax in the UAE, it is crucial for companies to have a clear understanding of how it works and the importance of corporate tax return filing accurately and on time.

Corporate tax is a levy imposed by the government on the profits generated by corporations. It’s a primary source of revenue for governments.  Understanding corporate tax is vital for any business owner in the UAE, as it directly impacts your financial bottom line. Therefore, we are here to explain all the essentials of corporate tax in the UAE, who need to register for the filing process, benefits, how to register, penalties for late filing, and much more.

What is Corporate Tax in the UAE?

Corporate tax in the UAE is a levy on the profits of businesses operating in the country. It’s essentially a tax that the government imposes on the net income a company earns after accounting for all its expenses.

Corporate Tax Rate in the UAE:

• There’s a standard rate of 9% applicable to taxable income exceeding AED 375,000.
• Businesses earning AED 375,000 or below in taxable income are subject to a 0% tax rate.
• A separate tax rate applies to large multinationals meeting specific criteria under the OECD’s Base Erosion and Profit Shifting (BEPS) project.

Exemptions and incentives:

• Certain businesses are exempt from CT, including UAE government entities, some resource businesses, and qualifying public benefit/investment funds.
• Qualifying free zone persons are generally exempt from corporate tax on their onshore taxable income but taxed at 9% for non-qualifying income.

Who Needs to Register for Corporate Tax in the UAE?

All taxable persons as defined by the UAE corporate tax regulations are required to register for Corporate Tax and obtain a Tax Registration Number. This includes companies established in the UAE mainland and free zones. Even companies established overseas but now managed and controlled in the UAE need to register.

Who is a ‘Taxable Person’?

The UAE corporate tax law defines a “Taxable Person” as any person who carries out an economic activity in the UAE, either individually or through a representative. This includes:

• Businesses (companies, partnerships, etc.)

• Branches of foreign companies
• Sole proprietorships
• Individuals carrying out an economic activity

The Federal Tax Authority (FTA) may request certain exempt persons to register for corporate tax, even if they wouldn’t be obligated otherwise.

What is Corporate Tax Return Filing in UAE?

Corporate Tax Return Filing in the UAE refers to the process of submitting a report to the Federal Tax Authority (FTA) by taxable person, detailing your business’s income and expenses for a specific tax period. This report helps the FTA determine your taxable income and the amount of Corporate Tax you owe.

All registered taxable persons must file a corporate tax return, even if they have no taxable income or qualify for a 0% tax rate.

Deadline for Filing Corporate Tax in the UAE

You have up to 9 months from the end of your relevant tax period to submit your return and pay any tax due.

For instance, if your company’s tax period follows the calendar year (Jan 1 – Dec 31), the deadline for filing the return for 2024 would be September 30, 2025.

Documents Required for filing a Corporate Tax Return in the UAE

The specific documents required for filing a corporate tax return in the UAE can vary depending on your company’s individual situation. However, some general requirements include:

• Financial statements (income statement, balance sheet)
• Audit Reports (if applicable)
• Tax Calculations
• Supporting Documents for Income and Expenses (Sales invoices and receipts, Purchase invoices and payments, Salary records, Depreciation schedules, etc.)

Procedure of Corporate Tax Return Filing in UAE

The procedure for filing a corporate tax return in the UAE involves several steps:

1. Registration (if not already done)

Every taxable person needs to be registered for Corporate Tax with the Federal Tax Authority (FTA) and obtain a Tax Registration Number (TRN). This applies even if you were previously registered for VAT.

2. Record Keeping

Maintain records of all your financial transactions throughout the tax period. This includes income

• Statements
• Balance sheets
• Invoices
• Receipts
• Supporting documents for expenses like salaries, rents, and depreciation.

3. Tax Calculations

Calculate your taxable income based on the financial statements and applicable tax laws. Consider deductions and exemptions you might qualify for. 

4. Prepare & Submit the Return

The FTA e-Services portal will guide you through the filing process, but it’s recommended to have the following information readily available:

• Financial statements
• Tax calculations and supporting schedules
• Details of any tax exemptions or deductions claimed

Once you’ve completed the online form and attached all necessary documents, submit the return electronically.

5. Payment of Tax Liability

If your company has any corporate tax liability after considering exemptions and deductions, you’ll need to make the payment electronically through the FTA’s e-Services portal within the specified deadline.

Keep copies of your filed return and supporting documents for at least five years, as mandated by the FTA for audit purposes.

Shuraa offers the best corporate tax services in UAE with expert consultants who guide you through the tax assessment, registration and return filing process.

Penalties for Late Filing

The penalties for late filing of corporate tax returns in the UAE are approx. AED 1,000 for the initial delay in filing the return. This penalty increases by AED 1,000 every month the return remains unfiled, with a maximum cap of AED 10,000.

For example, if your company’s tax return was due on February 28, 2024, but you don’t file it until April 30, 2024 (two months late):

Initial Penalty: AED 1,000

Additional Penalty (2 months * AED 1,000/month): AED 2,000

Total Penalty: AED 1,000 (initial) + AED 2,000 (additional) = AED 3,000

The FTA may choose to assess your tax liability if you fail to file a return on time. This can lead to a more complex and potentially higher tax bill compared to filing your own return.

Benefits of Timely Filing

• Save money by filing on time and avoid late submission and payment fees.
• Timely filing demonstrates compliance with the Federal Tax Authority (FTA).
• Avoid the stress and hassle of last-minute scrambling to meet deadlines.
• Ensure you don’t miss out on claiming any applicable tax breaks.

Let Shuraa Tax Handle Your UAE Corporate Tax Needs

Corporate tax return filing in the UAE can be a complex process for entrepreneurs, but it doesn’t have to be a burden. All you need is to carefully understand the requirements, adhere to deadlines, and maintain accurate records. Therefore, we recommend getting the right knowledge and guidance from a reputable tax consultant in the UAE such as Shuraa Tax for a corporate tax filing service.

Our team of qualified accountants, auditors, and tax advisors in Dubai bring a wealth of knowledge to the table. We can evaluate your tax situation, streamline bookkeeping, and handle the filing process. By working with Shuraa Tax, you can ensure that your business tax returns are filed accurately and on time to avoid any potential penalties or issues with the authorities.

So, contact us today at +971508912062. You can also drop us an email at info@shuraatax.com.

Frequently Asked Questions

1. Is it mandatory to file Corporate Tax Returns in the UAE, even if there is no tax liability?

Yes, all taxable persons as defined by the UAE corporate tax regulations are required to register for Corporate Tax and file returns, regardless of their tax liability.  This includes companies showing no profit or even incurring losses.

2. How often do Businesses need to file Corporate Tax Returns in the UAE?

Businesses in the UAE are required to file corporate tax returns electronically every nine months from the end of their relevant tax period.

3. Should I consider using a tax consultant or corporate tax filing services in UAE?

While you can file returns yourself, the process can be complex.  Tax consultants can ensure accuracy, and compliance, potentially identify tax optimization strategies, and save you time and resources.

4. Should Free Zone entities file for Corporate Tax Returns?

Yes, even Free Zone entities are required to register for Corporate Tax and file returns with the FTA. This applies regardless of whether they expect to qualify for the 0% tax rate for Qualifying Free Zone Persons.

5. Can I claim any deductions to reduce my corporate tax liability?

Yes, the UAE corporate tax system allows for deductions of certain business expenses from your taxable income. These can include ordinary and necessary expenses incurred for generating your business income. We advise you to consult our tax professional for a clear understanding of deductible expenses.