Corporate Tax Filing Requirements

In the UAE, Corporate Tax Filing is an obligation to perform; in adherence to the Federal Decree-Law No. 47 of 2022. The Federal Corporate Tax has brought up new chores you’ll have to deal with like startups or small businesses who may not be compliant yet. From timely tax registration, tax filing, to even tax de-registration, you are going to have to know what are the tax compliance requirements. There are a number of documents and information you need to be able to file your corporate tax return accurately. Let’s review step-by-step on how to file corporate tax in UAE.

KEY POINTS:

• Every business in the UAE must register for Corporate Tax and file annual tax return within 9 months of the financial year end to avoid corporate tax penalties.
• Businesses are required to keep their books and records accurate, showing all the income and the expenses in a detailed and accurate manner. Avoid any attempt to hide or mask any information as that can result in devastating implications, including hefty fines and even license revocation.
• Assess your profits by taking into account the allowable deductions, exemptions, transfer pricing adjustments, connected person and related party adjustments, and other adjustments required by the law.
• Financial audit is mandatory for corporate tax groups, companies with revenue of over AED 50m, and qualifying free zone entities.

Who Would Need to File a Corporate Tax Return?

All Taxable Entities must file a corporate tax return according to their tax period. This means that all UAE businesses (mainland and free zone), foreign businesses with a PE or sourced revenue in the UAE, and resident/individuals conducting business in the UAE at or above thresholds must file annual tax returns. Corporate tax filings are to be made nine-months after the conclusion of the financial year.

What Documents Are Needed for Corporate Tax Filing in The UAE?

Corporate Tax Filing requirements involve a number of documents and information about your business. Some of the important information and documents you need are listed below:

• General Legal Information: This includes Trade License of your company to determine and confirm your legal structure, trade license number, and jurisdiction of your company i.e. mainland or free zone.
• Financial Statements: You need management accounts or audited financial statements audited by an MOE-licensed audit firm to provide details of income, expenses, assets, liabilities, and equity.
• Transfer Pricing: In case your business transacted with related parties and/or connected persons (directors, senior managers, etc.) during the tax year, you must complete transfer pricing schedules provided within the tax return.
• Adjustments: Details of adjustments relating to unrealized/realized gains/losses, interest income, interest expenses, entertainment expenses, expenses incurred to earn exempt income, charities to Non-Qualifying Public Benefit Entities, and expenses that are not incurred for the purpose of your business.  

Corporate Tax Filing Deadline

Are there deadlines for corporate tax submissions in the UAE? Short answer is Yes, and it is applicable to every business. Every company has nine months from their financial year end date to file corporate tax return and pay due taxes (if any).

What Penalties Apply for Late Corporate Tax Filing in the UAE?

• AED 500 per month for late filing during the first year.
• AED 1,000 per month from the 13th month and thereafter until it is filed.
• 14% interest annually on the unpaid corporate tax liability.
• Other fines may be imposed in case of tax evasion or intention to evade taxes.

Mistakes Typically Made When Filing Corporate Taxes

• A lot of companies mistakenly assume they do not need to file corporate tax return because there is no revenue or the revenue is below the taxable threshold. This is the most common misconception and mistake. Every business registered in the UAE must file the annual tax return.
• Missing the nine-month deadline and delaying the submission of tax returns
• Filing an inflated or deflated taxable income and a lack of sufficient substantiation for even the tiniest write off.
• Failing to disclose transactions with related parties and connected persons.
• Failing to adjust tax returns with non-deductible expenses, most commonly those expenses that were not incurred solely for the purpose of business.
• Failing to provide audited financial statements in cases where audits are mandatory i.e. tax groups, qualifying free zone persons, etc.
• Inaccurate utilization of business losses

Can a Third Party File my Corporate Taxes in the UAE for Me?

Yes, a third party tax professional, an accountant and/or a corporate service provider can file your tax return and help you maintain required documentation and information necessary to comply with the tax law.

How Much is Corporate Tax Filing in the UAE?

The cost of corporate tax filing in the UAE largely depends on your company’s size, revenue, net profit, transfer pricing and other adjustments, and the tax consultant appointed to file your return. For general interpretation, small to medium straightforward filing can start at around AED 1,000 to 1,500. For larger companies with more in-depth requirements, such as annual audited reports, documentation for transfer pricing and additional advisory consultations, the cost of filing can range between AED 5,000 to 8,000+. These are average fee ranges with fluctuations based on revenue, number of transactions and whether independent bookkeeping and/or additional compliance measures are needed.