Corporate tax filing in the UAE is an important compliance process for companies doing business in the country. With the imposition of corporate tax by the Federal Tax Authority (FTA), companies need to file taxes on time and accurately to escape penalties and ensure hassle-free operations. Knowledge of the filing process, deadline, and compliance requirements is important for all businesses in Dubai and throughout the UAE.
What is corporate tax in the UAE?
Corporate tax is a direct tax on the net profit of companies. Implemented to harmonize with international taxation practices while preserving an investor-friendly climate, the UAE corporate tax rate is 9% for taxable profits above AED 375,000. Companies with profits below this amount are exempt from corporate tax.
Who Must File Corporate Tax Returns?
Compulsory Corporate Tax Filing:
The following must file corporate tax returns:
- Foreign companies with a permanent presence in the UAE.
- Any company registered under the FTA for the purposes of corporate tax.
Exempt Entities:
Certain businesses and organizations are exempt from filing corporate tax, such as:
Government institutions and public sector organizations.
Companies involved in natural resource extraction are subject to emirate-level taxation.
Charitable organizations and investment funds that meet exemption requirements.
Corporate Tax Filing Process in the UAE
The corporate tax filing in the UAE is a structured process through the FTA’s online platform:
Prepare Financial Statements: Companies should have proper accounting records and prepare audited financial statements where required.
Determine Taxable Income: Compute net profits taking into account eligible deductions and exemptions.
Access FTA e-Services Portal: Access the FTA website and proceed to the corporate tax return filing section.
Complete the Tax Return Form: Provide financial information, taxable income, deductions, and tax due.
File the Corporate Tax Return: Check and file the return within the timeframe.
Pay the Tax: Pay the corporate tax owed according to the FTA regulations.
Deadlines for filing corporate tax
The deadline for filing corporate tax varies based on the financial year of the business. In general, businesses have nine months from the close of their financial year to file their corporate tax return. For instance:
- If the financial year closes on December 31, 2024, the tax return should be submitted by September 30, 2025.
- If the financial year closes on June 30, 2024, the deadline for submission is March 31, 2025.
- Early filing is required to prevent penalties and maintain compliance with FTA laws.
The Corporate Tax Consultant’s Role in the UAE
It is easy to file and comply with taxes with the assistance of a corporate tax consultant UAE. Corporate tax consultants aid businesses with:
- Proper corporate tax computation to avoid penalties and errors.
- Maintaining compliance with FTA regulations and tracking tax law changes.
- Tax advisory and planning services to minimize liabilities and claim allowable deductions.
- Managing FTA audits and inquiries in the event of tax assessments or reviews.
- Corporate Tax Compliance and Record-Keeping.
Companies registered for corporate tax are required to comply with the following rules:
Keep Proper Financial Records: Keep accounting records and invoices for a minimum of seven years.
File Annual Tax Returns: File on time and report income and expenses correctly.
Pay corporate tax dues promptly. Payments attract fines and legal penalties.
Understand Permitted Deductions: Certain expenses, including business-related expenses and depreciation, can be deducted from tax-paying income.
Penalties for Late Filing or Non-Filing
Not filing corporate taxes as required may result in the following penalties:
- Late filing penalties: penalties charged for failure to meet deadlines.
- Failure to Keep Records: Failure by businesses to maintain adequate financial records can also attract extra penalties.
- Incorrect Tax Returns: Filing incorrect details can attract penalties and audits by the FTA.
- Legal Consequences: Repeated violations may lead to restrictions on business operations.
Conclusion
Corporate tax filing UAE is an essential process that businesses must complete annually to remain compliant with FTA regulations. Ensuring accurate tax filing, adhering to deadlines, and maintaining proper records are crucial steps for avoiding penalties and legal complications. Seeking advice from a corporate tax professional can guide companies through the filing process seamlessly, ensuring compliance and minimizing tax liabilities. With proper knowledge and a proactive approach, companies in Dubai and the UAE can run effectively in the dynamic tax landscape.
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