How to file corporate income tax returns and Required documents?

A company subject to Corporate Tax in UAE must enroll with the Federal Tax Authority (FTA) and get a tax identification number under the time frame that the final constitution will specify. If an individual does not willingly enlist a firm for Corporate Tax reasons, the Federal Tax Authority may force it to do so. If a company is no longer liable to file Corporate Tax in UAE, it may also go through the process of deregistering. Corporations will just be required to equip and file single tax returns (together with supplementary pertinent favoring schedules) with the federal tax authority (FTA) for every tax interval, which will save time and money on managerial tasks. Within 9 months of the conclusion of the applicable tax period, a Corporate tax return must be completed and any associated payments must be furnished. 

  • If there is a delay in payment, the tax law imposes penalties for late payment.
  • Businesses can claim a corporate tax refund if they have a higher withholding tax credit than their tax liability.

Corporate income tax filing returns and supporting documents 

Electronic Filing System

It is confirmed that corporate tax returns will be electronically cataloged through a website gateway, much like the VAT and Economic Substance Regulations filings. This system streamlines the process and reduces paperwork.

Supporting Documents Required

The supporting documents that are required to be filed have not yet been given any details but will be stated in the final law update.

  1. Financial records
    Businesses must maintain accurate financial records to support their tax returns.
  2. Computation of taxable income
    A detailed computation of taxable income, showing adjustments to net income as per accounting records, is required.
  3. Tax Depreciation Worksheets
    Worksheets and schedules for tax devaluation
  4. Transfer Pricing Records
    Records of transactions involving related parties must be kept to ensure compliance with transfer pricing rules.
  5. Transactions Involving Relatives
    Information on transactions with relatives is crucial for transparency and compliance.
  6. Provisions movement
    Documentation of provision movements is needed to support adjustments in taxable income.

Moreover, if we navigate the proposed corporate tax regime thoroughly, the following details are given regarding the process of filing documentation to meet the proposed compliance requirements:

  • A firm will only be required to equip and file one tax return with the Federal Tax Authority for each tax period, together with any additional applicable supporting records, to reduce the administrative load on taxpayers.
  • A corporation won't be required to submit a provisional corporate tax return or pay back advance Corporate taxes.
  • The Federal Tax Authority must receive each tax return along with any necessary supporting records within 9 months after the conclusion of the applicable Tax Period.
  • Within 9 months after the conclusion of the applicable Tax Period, expenses must be made to relieve a taxpayer's Corporate Tax liability for that duration. If a taxpayer can show that a Corporate Tax refund might be owed, the taxpayer can apply to the Federal Tax Authority to ask for a refund.

Knowledgeable corporate tax advisors not only help you to design your policies according to the proposed corporate tax regime but also facilitate you through the entire process of filing tax returns.

Read More: Deadline for Corporate Tax Registration in UAE 2024

Documentation requirements as per the corporate tax regime 

The Corporate Tax return and other papers filed to the Federal Tax Authority must be supported by monetary and other documents that the business must keep at hand. Additionally, some exempted individuals will need to keep evidence so that the Federal Tax Authority can verify their exempt status.

The relevant corporation rules and laws still control whether an organization's financial statements must be audited by a certified audit enterprise. A Free Zone individual, however, has audited financial accounts to take advantage of the corporate income tax UAE regime's 0% corporate tax rate.

You should also consult corporate tax advisory services to avoid any conflict regarding compliance and documentation.

UAE's participation in the extensive framework of OECD implements Corporate Tax logic, especially in light of talks surrounding the Pillar II suggestion. Comparing the planned rate of tax to additional jurisdictions, it is yet very affordable at nine percent. 

Additionally, the Consultation Document illustrates that the proposed Corporate tax regime is established on internationally accepted and widely used doctrines, which makes the tax and implementation process for companies prone to comparable regimes in distinct jurisdictions reasonably efficient. The bill appears to also protect several of the most distinctive tax advantages of the UAE, such as the tax advantages granted to firms established in free zones.

Read more: Corporation Tax Planning in UAE: Tax Saving Strategies for Businesses

Key Documents for Corporate Tax Filing

Document Type Description
Financial Records Accurate records supporting the tax return
Computation of Taxable Income Detailed adjustments to net income
Tax Depreciation Worksheets Worksheets detailing tax depreciation deductions
Transfer Pricing Records Records of transactions with related parties
Transactions Involving Relatives Information on transactions for transparency
Provisions Movement Documentation of provisions movements for adjustments
Audited Financial Statements Required for Free Zone entities to benefit from 0% tax rate
Evidence for Exempt Status Supporting documents for exempt status verification by FTA

FAQs

What are transitional rules in the administrative process of corporate tax in UAE?

Corporations will not need to restate their balance sheets to comply with the UAE Corporate Tax system once they do so. Rather, a taxable individual's closing balance sheet for financial reporting goals for the duration that ends right before the start of their first tax period would typically be their beginning balance sheet for Corporate Tax purposes.

When will the first tax period start?

Federal corporate tax law in UAE will be enforced with full effect in the upcoming year 2023. Consequently, the first reportable period will start on 1st July 2023 and will last up to 30th June 2024. All businesses that fall under the scope of corporate tax in the United Arab Emirates will have to prepare to report their taxes as soon as the first period starts. The businesses will be required to file their taxes before March 2025, and so on.

How to submit corporation tax return?

To file your company tax return, log in to the Federal Tax Authority (FTA) eServices portal, complete and submit your tax return, and pay any taxes due. Make sure all information is correct and keep the confirmation receipt for your records.

What documents are needed for filing corporate tax returns?

Financial records, taxable income computations, tax depreciation worksheets, transfer pricing records, and information on transactions involving relatives.

How can I apply for a corporate tax refund?

Apply to the FTA with supporting documentation if a refund is due.

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