Corporate Tax Timeline in UAE: All You Need to Know

According to the UAE Federal Decree-Law No. 47 of 2022 on taxation of corporations and businesses (the “Corporate Tax Law”), businesses are subject to UAE Corporate Tax from the beginning of their first financial year that starts on or after 1 June 2023. This tax is a form of direct tax levied on the net income or profit of corporations and other entities from their business. Top Tax Consultants in UAE assists Taxable Persons to effectively determine their tax period and ensure compliance with the Corporate Tax Law.

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Timeline to File UAE Corporate Tax

Financial Year 1 June 2023 to 31 May 2024

For businesses operating in the UAE during the financial year from 1 June 2023 to 31 May 2024, the following timeline must be adhered to:

• 1 January 2023 to 28 February 2025: Period of Registration ( 26 Months)
• 1 June 2023: Application of Corporate Tax Law
• 1 June 2023 to 31 May 2024: First Tax Period
• 1 June 2024 to 28 February 2025: Return Filing Period
• 28 February 2025: Return Filing Due Date for First Tax Period
• 1 June 2024 to 31 May 2025: Second Tax Period

Info graph: Financial Year 1 June 2023 to 31 May 2024

In this period, businesses are advised to seek the expert services of top Tax Consultants in UAE, well in advance. Tax Consultants provide professional guidance and ensure all required documents are in order and compliant with statutory regulations. This proactive approach can help streamline the filing process and reduce the risk of missing deadlines, which consequently incur fines and penalties.

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Corporate Tax Registration Deadlines for 2024 Based on License Issuance Date

Financial Year 1 January 2024 to 31 December 2024

For the subsequent fiscal year, which runs from 1 January 2024 to 31 December 2024, businesses must follow this timeline:

• 1 January 2023 to 30 September 2025: Period of Registration ( 33 Months)
• 1 June 2023: Application of Corporate Tax Law
• 1 January 2024 to 31 December 2024: First Tax Period
• 1 January 2025 to 30 September 2025: Return Filing Period
• 30 September 2025: Return Filing Due Date for First Tax Period
• 1 January 2025 to 31 December 2025: Second Tax Period

Infographic: Financial Year 1 January 2024 to 31 December 2024

During this period, businesses have the opportunity to learn from their first filing experience. It's advisable to establish robust accounting practices and maintain accurate records throughout the year. This diligence can significantly streamline the tax filing process.

Financial Year 1 April 2024 to 31 March 2025

For the third fiscal year under the new tax regime, which extends from 1 April 2024 to 31 March 2025, the following timeline applies:

• 1 January 2023 to 31 December 2025: Period of Registration ( 24 Months)
• 1 June 2023: Application of Corporate Tax Law
• 1 April 2024 to 31 March 2025: First Tax Period
• 1 April 2025 to 31 December 2025: Return Filing Period
• 31 December 2025: Return Filing Due Date for First Tax Period
• 1 April 2025 to 31 March 2026: Second Tax Period

Infographic: Financial Year 1 April 2024 to 31 March 2025

By this point, businesses should have a solid grasp of the tax filing process. However, it's crucial to remain vigilant about updates or changes in tax regulations. Staying informed ensures continued compliance with UAE tax laws.

Updated Penalties for Late Registration

The UAE Ministry of Finance has recently updated its penalty framework for late corporate tax registration. As part of this new framework, companies that fail to register for corporate tax by the stipulated deadline face a penalty of Dh10,000. This measure underscores the importance of timely compliance with tax obligations and reinforces the UAE's commitment to maintaining a transparent and efficient tax system.

Consequences of Missing Tax Return Deadlines

Adhering to the prescribed timelines for corporate tax filing in the UAE is an essential regulatory requirement; it is a fundamental part of maintaining a stable business environment. Failing to meet these deadlines can lead to a range of severe consequences:

• Penalties and Fines: The UAE tax authorities impose significant penalties for late filing of tax returns. These penalties can accrue daily until the return is filed. Depending on the delay, fines can significantly impact a company's financial stability.
• Loss of Good Standing: Non-compliance with tax return deadlines can result in a loss of good standing with the tax authorities, which can adversely affect a company's reputation and its ability to do business effectively.
• Legal Ramifications: Non-compliance with tax regulations can lead to legal action, including the suspension or revocation of business licenses. This can disrupt business operations and lead to long-term consequences.
• Reputational Damage: Late or non-compliance with tax obligations can tarnish a company's reputation in the market. It can lead to a loss of trust among stakeholders, including customers, partners, and investors.
• Audits and Scrutiny: Companies that fail to meet tax return deadlines may be subjected to rigorous audits and scrutiny by tax authorities. This can consume time and resources that could be better utilized for business growth.
• Cash Flow Constraints: Penalties and fines resulting from late filings can impose significant financial burdens on businesses. This may affect cash flow and the company's ability to invest in expansion or day-to-day operations.

Read More: UAE Corporate Tax Registration and Return Filing

For businesses to effectively determine their tax period and ensure compliance with the Corporate Tax Law, it is advisable to avail the expert services of Top Tax Consultants in UAE. Tax Consultants in UAE are committed to assisting businesses with professional corporate tax advisory. Thus, contact us today and we shall be glad to assist you.