ByFiling corporate tax returns is a legal requirement for businesses in the UAE, and failure to do so often results in heavy fines.
So, businesses must file returns accurately and on time to comply with regulations and avoid penalties.
This blog post will walk you through the key steps involved in filing corporate tax returns in the UAE.
Step 1: Know Your Eligibility
First things first, confirm whether your business is subject to tax. Businesses such as large corporations, limited liability companies (LLCs), and foreign branches are generally taxable if their profits exceed AED 375,000.
In some cases, natural persons conducting business in the UAE might also be required to pay corporate tax if they meet specific criteria.
Check your eligibility status before proceeding with registration. If you’re unsure, consult with a UAE tax expert to get more clarity.
Step 2: Register for Corporate Tax
Like we mentioned earlier, registration for corporate tax is mandatory for all taxable entities.
To get started, businesses must prepare essential documents, such as their trade license, company incorporation certificate, shareholder identification, and bank details.
The next step is to create an account on the FTA’s online platform, EmaraTax, and complete the corporate tax registration form. Once registered, your company will be assigned a Tax Registration Number (TRN), which is a prerequisite for submitting your returns.
Step 3: Determine Your Tax Period
You can follow the standard Gregorian calendar (January 1 to December 31). Or, you can customize it to align with your company’s fiscal year. The choice is yours!
If you wish to change your financial year, submit an application to the FTA. The tax return filing deadline is set nine months after the end of your tax period, so it’s important to determine your company’s specific timeline. For instance, if your tax period ends on December 31, 2024, your filing deadline would be September 30, 2025.
Step 4: Prepare Your Financial Statements
Your financial records should comply with the UAE’s accounting standards, particularly the International Financial Reporting Standards (IFRS). Maintain key documents like your income statement, balance sheet, and cash flow statement. These statements will form the foundation for your tax return and get you all set for filing, come tax season.
Step 5: Calculate Taxable Income
The taxable income of your business is calculated by subtracting allowable business expenses from total income. Expenses like salaries, rent, and marketing costs are generally deductible. Consider also special exemptions and tax incentives, like those for research and development or businesses operating in free zones. Consult a tax professional to account for all expenses and exemptions properly.
Step 6: Check for Tax Reliefs
The UAE provides several tax reliefs for businesses. For example, there’s a small business relief for companies with an annual turnover under AED 3 million. Then there are group taxation relief for companies that are part of a tax group and business restructuring relief for qualifying mergers and restructuring activities. Make sure you understand your business qualifies for these reliefs and keep proper documentation to claim them successfully.
Step 7: Gather and Upload Required Documents
When filing your corporate tax return, you will need to upload several supporting documents. These may include your financial statements, tax loss schedules, and any documents related to exemptions or reliefs you’re claiming. Double-check the accuracy of these documents before uploading them to the FTA portal.
Step 8: Complete and Submit Your Tax Return
After gathering all necessary documents, visit the FTA’s EmaraTax platform to access the corporate tax return section. Fill in the required details, attach supporting documents, and double-check everything before submitting. Remember, accurate returns are processed faster and have little to no risk of errors that could delay the filing process.
Step 9: Pay Your Tax Liability
Once your corporate tax return is submitted, the FTA will inform you of any tax liabilities. You must make the payments within nine months of the end of the tax period. You can process them through the FTA portal using various payment methods, including bank transfer or eDirham. Be sure to settle the liability on time to avoid interest or penalties.
Step 10: Keep Records for Future Audits
The UAE law requires businesses to maintain proper records for a minimum of seven years.The FTA might also request additional documentation for auditing purposes.
So, save all documents even when your corporate tax return is filed and payment is made. This may include financial statements, tax returns, bank statements, and any contracts or agreements related to your business. Keep all records up to date for at least seven years after the end of the relevant tax year.
Conclusion
If you’re new to the UAE corporate tax system, follow these steps and stay on top of your record-keeping and filing. If you’re uncertain at any step, don’t hesitate to seek professional advice to ensure your business stays compliant and minimizes its tax liabilities.
