Guide to Corporate Income Tax Filing UAE

The method of calculating corporate tax under UAE taxation law involves using the net profit that appears in the profit and loss of a company. Corporate tax return preparation and filing involves categorizing various documents that reflect the financial position of an organization to determine the corporate tax that is payable to the government. Below is information on the basic steps and timeframes for corporate tax registration and filing to ensure businesses do not violate UAE tax legislation.

Required Information for Filing a Tax Return

Your tax return must include the following information:

• Your TRN and tax period.
• Income, taxable income, and amount of tax.

Essential Documents for Corporate Tax Filing

To prepare for corporate tax filing, gather the following documents:

• Income tax computation using financial statements.
• Receipts for deductions.
• Assumption of the estimated exempt income using the financial statements.
• Exemption/exception status.
• Documents required for business loans like the interest paid for the loan amount.
• Transfer pricing records.
• Foreign tax/credit treatments.

Financial Statements

Financial statements are the main documents that companies use while reporting their taxes to the internal revenue services. These documents give the financial administration a broad outlook of the company’s performance and status in the accounting period.

1. Income Statement (PLSStatement):
   • It consists of losses, profits, expenses, and revenues for the under-consideration tax period.
   • True picture of company  assessable/taxable  income 
2. Balance Sheet:
   • The true picture of the company's financial position for a concerned date.
   • Essential for taxable period i.e. shareholders equity divides assets and liabilities, 
3. Cash Flow Statement:
   • It consists of financing, records cash receipts, investments, and payments from business operations
   • Critical for making appropriate tax strategies and ensuring adequate funds before the due dates.

Transfer Pricing Documentation

Transfer pricing documentation is mandatory for companies dealing with related parties in cross-border transactions. It ensures compliance with regulations and checks tax base erosion.

1. Local File:
   • Contains specific information about intercompany transactions.
   • Proves that transactions occur on an independent third-party basis.
2. Master File:- The local file is supported by the master file which presents a more general view of the transfer pricing policies of the multinational group
   • Contains information that sets the background for the local file, including organizational structure and business operations.

Evidence of Foreign Tax Credit Paid

If your company earns income in foreign countries and is subjected to taxes, you can reduce its taxes using the foreign tax credit. To claim this credit:

• Gather supporting records and copies of tax receipts, foreign returns, and statements from foreign tax authorities.

Record of Qualifying Expenditures and Overall Expenditures Incurred

Some costs can be treated as tax credits or deductions, especially in research and development. To claim these benefits:

• Maintain detailed records of all receipts, invoices, and project reports used for expenditure approval.
• Track overall expenditures to create accurate records for compliance on taxation.

Documentation for Market Value of Financial Assets/Liabilities

Presenting the movement and value of financial assets and liabilities is critical for identifying the financial position of an organization to enable accurate reports and meet tax obligations.

1. Valuation of Financial Assets:
   • Keep records of market values of investments, loans, and other related financial records.
2. Valuation of Liabilities:
   • Record the original cost of debts and liabilities to arrive at the firm’s net assets and tax liability.

Completing and Submitting the Corporate Tax Return

Once the necessary documents are obtained, the next step is to complete and submit the corporate tax return. This involves:

1. Compilation of Financial Data:
   • Organize all financial information required for the tax return.
2. Completion of Tax Forms:
   • Complete the prescribed tax forms issued by the tax authority.
3. Review and Verification:
   • Ensure the correctness of the prepared tax return and compliance with tax legislation.
4. Submission Before Federal Tax Authorities:
   • On or before the deadline, the filing should be completed and submitted
5. Payment of Tax Liabilities:
   • Determine and pay the taxes owed before the specified date.

Post-Filing Considerations

After filing the corporate tax return, consider the following:

1. Record Keeping:
   • Keep copies of the filed tax return and supporting documents for the set period.
2. Responding to Tax Authorities:
   • Be ready to answer any questions or provide more information required by the tax authorities.
3. Tax Planning for Future Years:
   • Use the current tax return data to prepare for future tax filings.

Filing Timeline: Example Scenarios

Filing and Payment Due Dates

Recent updates regarding corporate tax filing deadlines in UAE

These changes were officially announced in Decision No. 7 of 2024. It mainly applies to businesses with tax periods ending before February 29, 2024, which now have until December 31, 2024, to file their returns.

Deadline with Different Categories of Taxable Entity

Disputing Tax Assessments

If dissatisfied with the assessment by the Federal Tax Authority, the taxpayer may file an appeal within 20 working days of the assessment notice. The appeal must include reasons for the objection and either clear the amount in dispute or provide a bank guarantee.

1. Assessment of Objection:
   • The FTA assesses the objection and issues a decision within 20 working days from filing the objection.
2. Tax Disputes Resolution Committee:
   • The aggrieved taxpayer can approach the Tax Disputes Resolution Committee within twenty (20) business days from the FTA’s decision receipt.
3. Decision of Tax Disputes Resolution Committee:
   • The committee decides the appeal within 20 business days of receiving it.
4. Pursuing the Matter to Court:
   • If still concerned, pursue the matter to court within 20 working days of receiving the committee’s decision.

Retention Periods for Records and Documents

• Real Estate Records: Maintain for seven years from the last day of the year the record or document was made.
• Voluntary Compliance: Extend by one year if agreed voluntarily in the fifth year.
• Tax Audit or Litigation: Where the provisions of the Act require the extension of the reporting period by four years this should be done in cases of tax audit, litigation or notice from the FTA.
• Legal Representatives: The case files should be kept for one year after the practitioner has stopped practicing.

IFRS and the Process of Financial Statements Preparation

• Mandatory IFRS Adoption: IFRS is used when preparing the financial statements so as to show the financial performance and position of an organization in the best way.
• Auditing and Fairness Opinion: It is required that the financial statements be audited by independent certified auditors based on the financial statement and corporate tax return.
• Timely Response to Requests: To submit records or documents to the FTA, one is required to do so within ten working days.

Frequently Asked Questions

What is corporate income tax filing?

Corporate income tax filing means different things to different people. Corporate income tax filing is the process of submitting a company’s financial information to the tax authorities including income and expenditure in order to calculate the taxes to be paid.

When are corporate income tax filings due?

The tax returns for the corporate income tax are filed according to the fiscal year ending of the company and the due dates of filing are specified by the respective tax authorities.

What forms are needed for corporate income tax filing?

The forms that are necessary depend on the jurisdiction but normally the forms include a balance sheet, income statement, and other schedules of income, deductions and credits.

Can corporate income taxes be filed online?

 Yes, most jurisdictions offer e-filing for corporate taxes which is a convenient and effective method of filing tax returns.

What are the penalties for late corporate income tax filing?

Consequences of failure in the submission of tax returns can result in charges such fines, and interest on the unpaid taxes, and possible legal proceedings by the government.

What deductions are available for corporate income tax?

For the business, tax deductions can be the salaries of its employees, rent for business premises, utilities and other costs that are incurred in the running of the business among others.

How can a business prepare for corporate income tax filing?

Preparation includes securing of financial statements, proper record keeping and seeking advice from tax advisors.

What are the rates of corporate taxes? 

There are differences in tax on corporations depending on the country and it may depend on factors like the size of the business, type of business, and revenue earnings.

What is the difference between corporate income tax and personal income tax?

Corporate income tax is charged on the earnings of a corporation while personal income tax is charged on a person’s income.

Can businesses get an extension for filing corporate income taxes?

Yes, indeed, businesses frequently request for an extension to file their corporate income taxes but this must be done within certain guidelines and within a certain time frame.

The process of corporate tax filing in the UAE is dependent on certain rules and regulations and deadlines right from preparation. Thus, a detailed analysis of modifications in price and cost structure in financial as well as operational models and the necessity of the modification of transfer pricing models, compliance of all the above-mentioned modifications with conditions of Free Zone, will help to orient businesses effectively in the new tax environment. Filing is a critical process as it helps in compliance and non-amiss of filing helps in avoiding fines hence helping in organizational flow.

Read more: How to file corporate tax return in UAE

Choose UAE tax consultants 

Taxable persons should avail of the services of accredited Corporate tax UAE consultants to file their returns seamlessly and to stay compliant with corporate tax regulations and standards and give reviews on corporate tax. Thus, contact us today and we shall be glad to assist you.