Guide to File Corporate Tax Declarations in the UAE

A declaration under corporate tax UAE is a statement that a taxable person must submit to the FTA to report their income and expenses for a financial year and calculate their corporate tax liability. The UAE Ministry of Finance issued Ministerial Decision No. 118 of 2023 on 11 May 20231, which regulates the declaration and payment of corporate tax. The decision covers the following aspects. The steps and requirements for submitting the corporate tax declaration online through the FTA’s website, including the necessary attachments such as audited financial statements and supporting documents. The ways and deadlines for paying the corporate tax owed or requesting a refund of excess tax paid, as well as the outcomes of late payment or non-payment of tax. The situations and requirements for changing the corporate tax declaration after submission, as well as the penalties and interest for submitting a wrong or incomplete declaration.

The Electronic Declaration Filing Through E-Portal: -

Filing the declaration electronically through the FTA’s e-services portal is required within four months of the end of the financial year.

The declaration must include the following information:

• The taxable person’s name, address, corporate tax registration number, and financial year.
• Income from all sources, for instance royalties, interest, dividends including business activities, and other investment benefits.
• The taxable person’s expenses that are deductible for corporate tax purposes, such as salaries, rent, depreciation, interest, and other business-related costs.
• After deduction of expenses net profit or income is calculated.
• The taxable person’s corporate tax rate, which depends on their income level and business sector.
• The taxable person’s corporate tax due, which is the product of net income and tax rate.
• The taxable person’s corporate tax paid, which is the amount of tax that has been paid in advance or withheld at source.
• Tax balance, the difference between tax paid and tax due.

The declaration must be accompanied by supporting documents, such as financial statements, invoices, receipts, and contracts, to verify the accuracy and completeness of the information provided. The FTA may audit the declaration and request additional information or clarification from the taxable person. The taxable person must pay any outstanding corporate tax balance within the deadline specified by the FTA. 

How to ensure accuracy and compliance when filing a UAE corporate tax declaration?

Here is the list of some common mistakes that are required to avoid while filing a corporate tax declaration in the UAE:

• Late filing: The declaration is required to be filed within four months from the conclusion of the relevant financial year, consequences, fines and penalties.
• Failure to maintain records: The declaration must be supported by adequate and accurate documents, such as financial statements, invoices, receipts, and contracts are required to be kept for five years after the completion of the relevant financial year.
• Incorrect calculation of income and expenses: The declaration must report the income and expenses of the taxable person from all sources, including business activities, dividends, interest, royalties, and other investment returns.
• The expenses and income calculation may be made as per UAE corporate tax and International Financial Reporting Standards (IFRS).
• Issues with deductions and tax credits: The declaration must include the expenses that are deductible for corporate tax purposes, such as salaries, rent, depreciation, interest, and other business-related costs. The declaration must also include the tax credits that are available for foreign taxes paid or withheld at source. The deductions and tax credits must be claimed in accordance with the UAE corporate tax law and the relevant double tax treaties.
• Mistakes when applying the tax rate: The declaration must apply the correct tax rate to the net income or profit of the taxable person. Nine percent is the standard tax rate that may be increased for large multinationals entities according to Pillar Two. The tax rate must be consistent with the corporate tax law UAEand the relevant regulations.

Can You File an Amended Declaration Under Corporate Tax UAE?

Yes, you can file an amended declaration under corporate tax UAE if you discover any errors or omissions in your original declaration. You must file the amended declaration within 30 days of becoming aware of the mistake, or within the deadline specified by the FTA, whichever is earlier. You must also pay any additional tax due or claim any refund due as a result of the amendment. The FTA may accept or reject the amended declaration, depending on the nature and extent of the error or omission.

Choose Tax Consultants in UAE

Filing a declaration under corporate tax UAE is an important obligation for all taxable persons that conduct business activities in the UAE. The electronic filing of declaration is mandatory through the e-services portal of Tax authorities within the stipulated time as per regulations i.e. four months. The declaration must include the income and expenses of the taxable person from all sources, the net income or profit, the corporate tax rate, the corporate tax due, the corporate tax paid, and the corporate tax balance. The declaration must be supported by relevant documents and must comply with the UAE corporate tax law and the relevant regulations. The taxable person must pay any outstanding corporate tax balance within the deadline specified by the FTA. Thus, it is advisable for businesses to seek the expert services of top Corporate Tax Consultants in UAE to effectively ensure compliance with declaration filing and meeting all corporate tax requirements. Contact us today and we shall be glad to assist you.