UAE Corporate Tax: Compliance & Reporting Obligations

Corporate tax is a direct type of tax on business and corporate profits. It applies to all businesses starting from June 1, 2023. The purpose of this tax is to generate revenue to support growth and developments in the country, and at the same time incorporate global best practices into the UAE’s taxation framework and prevent damaging tax practices. Corporate tax in the UAE binds taxable businesses and corporations to fulfil certain compliance and reporting obligations. All businesses that are subject to corporate tax need to comply and report to the FTA (Federal Tax Authority).

Jitendra Tax Consultants helps businesses fulfil compliance and reporting requirements seamlessly and effectively. We ensure that your reporting is error-free and help you deal with reporting and compliance issues.

Here is all you need to know about corporate tax compliance and reporting requirements;

What is Corporate Tax in UAE?

• Corporate tax is a tax levied on business and corporate profits, including services, manufacturing, trading, and other business activities.
• The tax rate is zero per cent for taxable income generated in a tax period that does not exceed 375,000 AED.
• The tax rate is 9 per cent for taxable income generated in a tax period that exceeds 375,000 AED.
• Every taxable person must register for corporate tax in the UAE and pay 9 per cent tax if its annual taxable income exceeds 375,000 AED during a tax period
• Corporate tax is filed annually. Only some large corporations file returns quarterly on FTA’s demand.

Corporate Tax Compliance and Reporting Obligations

• Corporate tax compliance and reporting is a prerequisite for every business that falls under its scope.
• Corporate tax registration is mandatory to comply with corporate tax whenever a business’s annual taxable income exceeds the 375,000 AED threshold. However, there is no threshold for businesses to register for CT; businesses should register if they fall under the definition of a taxable person. Registration needs to be done online through FTA’s services portal – Emaratax
• Businesses that have already registered with corporate tax but cease to be taxable persons must deregister from corporate tax. It is important that no pending tax or penalty is payable; otherwise, deregistration can not be done.
• For corporate tax compliance, businesses need to maintain accurate and transparent financial records and documents. These records are required at the time of reporting, and the FTA can also require these documents if needed. The financial records must comply with UAE-accepted accounting standards, i.e., IFRS (International Financial Reporting Standards).
• For registered businesses, corporate tax returns must be filed annually within the due date. The due date to pay corporate tax is nine months from the end of the tax period. Moreover, some businesses have to file corporate tax returns on a quarterly basis as per FTA’s commands.
• Every business registered for corporate tax must comply with local and international transfer pricing (TP) regulations to comply with CT in UAE.
• Taxable businesses that conduct transactions with connected persons or related parties must comply with the arm’s length principle, which is usually determined using transfer pricing methodologies, such as the resale price method, the cost plus method, etc.
• Businesses that conduct transactions with connected persons or related parties also need to prepare transfer pricing documentation and submit transfer pricing disclosure forms when reporting corporate tax to the FTA.
• Businesses that operate in more than one jurisdiction can also be required to prepare country-by-country reports (CbCR).
• Businesses must comply with UAE international agreements in force, including double taxation agreements, to comply with CT in UAE.

Best Practices for Businesses

• Always consult a qualified tax agent like JTC for better compliance.
• Always keep tracking updates in tax laws.
• Ensure accurate and proper record keeping.
• File your tax returns before the deadline. Save yourself from penalties as much as you can.
• Conduct audits if required. Look for qualified auditors in the UAE.

Why Choose Taxgian?

Taxgian helps your business with various tax matters, such as dispute resolution, transfer pricing, international tax matters, tax optimisation, tax planning, and compliance, etc. Our tax agents have expertise and experience in corporate tax and other taxes in the UAE. Our experts are great at communication and can resolve your issues seamlessly and effortlessly. Contact our experts today and choose the right plan or service for your business.