Understanding Corporate Tax Refund in the UAE

Corporate tax in the UAE is self-assessed, which implies that firms are required to compute and report their taxes correctly. Taxable persons compute their taxes using the taxable income and the existing rates of tax, which makes it easier and reduces the use of paper. The Corporate Tax Law also lays down the period within which a corporation must pay the corporate tax to ensure compliance. Under Article 48 of the law, corporate tax must be paid within nine months after the end of the relevant tax period and in compliance with the filing of tax returns under Article 53. Paying the corporate tax after the due date is a contravention of both the Corporate Tax Law and the Tax Procedures Law and therefore attracts penalties as stated in the law.

How to Apply for a Corporate Tax Refund in the UAE?

According to the Corporate Tax UAE Article 49 of tax law, there are situations whereby the taxable person has overpaid the corporate tax through withholding or actual payment to the FTA. In such situations, the taxable person can apply for a corporate tax refund.

• Taxpayers eligible for a refund under the Corporate Tax Law can submit a formal application to the Federal Tax Authority (FTA).
• The application must be submitted using the prescribed form and method determined by the FTA.
• Upon receipt of the refund application, the FTA will review it within 20 business days from the submission date.
• If additional information is required, the FTA may extend the review timeframe.
• The taxpayer will be duly notified if the review period is extended.

Eligibility Criteria for Taxable Persons/Companies for Corporate Tax Refund:

Taxpayers eligible for a refund under the Corporate Tax Law can submit a formal application to the Federal Tax Authority (FTA) using the specified form and procedure set by the Authority.

Once the Refund application is received, the FTA will evaluate it within 20 business days from the date of submission. If additional information is required, the timeframe may be extended, and the taxpayer will be duly notified.

• Excess Withholding Tax Credit (Article 46(1)):- If the amount of withholding tax credit is more than the corporate tax that is payable under the UAE Corporate Tax Law, the taxable person is entitled to a refund.
• Overpayment of Corporate Tax:- In the case where a taxable person has paid more corporate tax than required, they are allowed to claim a refund of the excess amount.

Cases When Corporate Tax Refund Is Not Made

• Disputed Tax Amount:- If there are other disputed tax amounts concerning the taxpayer, the refund application cannot proceed.
• Tax Audit:-In case the taxable person is under a tax audit and meets the conditions provided by the FTA’s board of directors, a refund cannot be claimed.
• Court Orders:- In case there is any competent jurisdiction court order regarding the stay of refund proceedings, a refund cannot be processed until the court order is vacated or withdrawn regarding the refund.

How to Get Back Refund of Corporation Tax in the UAE

• Application Process:- Taxable persons/Companies in the UAE may apply for tax refunds for overpayments or qualifying conditions for tax exemptions or credits. Here’s a summary of the process, eligibility criteria, and necessary documentation:
• Filing the Tax Return:- Business entities must file their tax return exactly, with all activities, taxable profit, and claims for over-recovery documented. The FTA manages these processes.
• Form Submission:- Use the FTA’s designated forms for tax returns and refunds, ensuring all sections, including claims for overpayment, are completed.
• Supporting Documentation:-It Include comprehensive supporting documentation such as financial statements, receipts, and transaction records to substantiate the refund claim.

Payment Options:-Corporations can specify how they wish to receive the refunded amount:

• Direct Bank Transfer:- Provide bank account details for a direct refund.

• Offset Against Future Liabilities:-They can be the refund of an amount which should be credited to the future taxes you may pay in the future.

• Adjustment Against Other Taxes:- This should be utilized to offset other tax liabilities such as Value Added Tax (VAT).

FTA Assessment

The FTA payment of refund shall be made within 20 business days from the date of submission of the refund application, providing that the application is complete and supporting documents have been submitted. The amount of time taken to perform the above steps depends on several factors, and there is usually a duration set aside to further review the claims assuring their accuracy. Larger refunds may need compliance sweeps before payment, which may take anything between several weeks and several months. This may be done before the expiry of this period, provided that additional information is required for further tax assessment of the statements in the tax return, which must be noted to the taxpayer or contact corporate tax UAE .                                                                                

Deferral of Refund Processing: The FTA may decline to process a refund request if the taxpayer has not filed their tax returns. After all the proper returns have been filed, the refund, along with any excess, shall be computed.

Set-off and Notification by FTA:- The FTA will also adjust the requested amount against any undisputed amount of tax or administrative penalties that the applicant taxpayer owes to the FTA before issuing a refund. This makes it possible to clear all the dues before the refund is processed.

Approval and Repayment:- In case of approval of the refund application, the FTA will begin the repayment process within five business days of informing the taxpayer, by the repayment process agreed by the Authority.

Frequnetly ASked Questions (FAQs)

What documents are needed for a corporation tax refund?

• Prescribed form from FTA website
• Complete tax return
• Financial statements/audited accounts
• Detailed transaction accounts
• Receipts & Invoices to supporting the refund claim

How long does it take to get a corporation tax refund?

Processing time ranges from weeks to several months, depending on the claim's complexity and documentation quality.

Are there any qualifications for a corporation tax refund?

Yes, eligibility generally includes overpayment of taxes, errors in initial tax calculations, or unclaimed specific tax credits and deductions.

Whether payment of tax and filing of return can be made simultaneously?

Yes, taxpayers can pay their corporate tax liability while filing their tax returns, as both are due at the same time.

Are there any consequences if corporate tax is not paid on the due date?

Yes, there are fines and penalties as a consequence if Corporate Tax is not paid on its due date as per Tax Procedures Law and Ministerial Decision no.74/23.

What is the corporate tax refund procedure?

File your refund claim with the FTA as per the Tax Procedures Law. The FTA will decide based on legal requirements.

Which is the competent authority for control and administration of the UAE corporate tax?

All matters concerning the tax, for instance, penalties, filing, and payment concerning corporate tax are handled by the Federal Tax Authority.

Filing, refunding, and payment processes of the UAE corporate tax law should be clearly understood to prevent punitive actions. When it comes to payment dates, it is best to coordinate them with tax return filings and to take advantage of refund provisions for overpayments and withholding taxes. A professional tax consultancy firm in the UAE can help in these processes to avoid hitches during the implementation phase. The purpose of this guide is to identify and briefly describe the key elements of these processes along with the compliance and timing considerations.or contact us corporate tax UAE for your help.