Corporate tax (CT) is a direct tax on a company’s net income or profits – and any company required to pay corporate tax will need to file a corporate tax return. Helpfully, the Federal Tax Authority (FTA), the entity responsible for the administration, collection and enforcement of federal taxes in the UAE, has released several comprehensive guides to paying corporate taxes to make the process more transparent. Unhelpfully, these documents are long and, for the uninitiated, confusing. If this is the first time you need to file a corporate tax return in the UAE, or you want to remind yourself of the key stages of the process, we’ve put together a top-line guide to help you feel more confident about filing your corporate tax return in the UAE.
How to file a corporate tax return in UAE: Step-by-step
We’ve broken down the process of filing a corporate tax return into five simple steps to give you an idea of how the process works.
Step 1: Assess whether you need to file a corporate tax return
Most commercial businesses need to file a corporate tax return, but there are a few exceptions. If your business operates in a free zone, you might need to complete a Free Zone schedule to confirm whether you meet the de minimis requirement. This involves providing a breakdown of revenue, expenses and salaries. If your company has restructured or is part of a ‘qualifying group’, check if you qualify for any relief.
Step 2: Register on the EmaraTax Portal
Corporate tax returns must be filed online via the EmaraTax Portal. If you haven’t already done so, create an account and verify your business details, as your tax return form will be tailored to your registration type. You may also need to provide supporting documents, such as business licenses and financial records.
Step 3: Prepare and review financial statements
All businesses need to make sure their financial statements are accurate and follow UAE accounting standards. If audited, include your auditor’s name, corporate tax registration number and audit opinion. You will also need to report accounting income such as exempt income, unrealised gains and losses (profits or losses on unsold assets) and participation exemption (income from qualifying investments)
Step 4: Complete the Corporate Tax Return and attach supporting documents
Once you have prepared the financial statements, you need to complete the tax return on the EmaraTax portal. This includes tax elections, non-deductible expenses and tax reliefs.
Step 5: Submit the return and settle tax liabilities
After reviewing your return for accuracy, you can submit your return electronically and pay any tax due before the deadline.
Who needs to file a corporate tax return in the UAE?
The federal tax system applies to all businesses and commercial activities operating within the emirates. This includes:
- UAE-based businesses
- Free zone entities engaging in activities beyond their designated free zones
- Non-resident companies (foreign companies) earning income from UAE-based operations.
Interestingly, there are several exemptions. Businesses operating in the extraction of natural resources are subject to tax decrees issued by the Emirate in which they operate. Businesses registered in free zones that comply with all regulatory requirements and do not conduct business with Mainland UAE may be exempt too.
For a long time, the foreign banking sector was exempt from the system too and subject only to the Emirate-level bank tax decree, but as of 2023 the sector is now subject to the UAE Federal Tax Law.
Deadlines and penalties for late filing
Failing to file your corporate tax return on time will result in financial penalties, which increase over time, so make sure you file in good time. As well as filing penalties, you will need to pay interest charges, so don’t get caught out.
All corporate tax returns must be filed electronically via EmaraTax within nine months after the end of the financial year. For example, if a company’s financial year ends on 31 December, it would need to file a corporate tax return by 30 September the following year.
Common mistakes to avoid when filing a corporate tax return
Filing a corporate tax return is a lengthy and fairly complicated process, so it’s easy to make mistakes along the way. Here are some of the most common mistakes we see:
Not providing enough detail for data requirements
The UAE corporate tax return is a highly detailed document, with customised fields and schedules based on taxpayer selections. It’s important to plan carefully and prepare all data in advance of preparing the document.
Mistakes with financial statements and tax elections
Choosing the wrong tax election – for example, small business relief – can affect how much tax you owe. All financial statements must be accurate and complete too, as any errors or missing details could risk your statement being rejected.
Failing to meet Transfer Pricing (TP) compliance
If a company claims tax relief for Qualifying Group Transfers or Business Restructuring, it needs to meet specific conditions. If these conditions aren’t met, the tax authorities can revoke the relief (a “clawback”), which means the company may end up owing more tax.
- Missing the deadline: Failing to submit your tax return on time will lead to substantial fines and additional interest charges. Make sure you send your return in good time.
- Failing to provide supporting documents: Every claim and dedication needs to be supported by records to avoid any queries or penalties, but you’d be surprised by how many people forget to provide this.
To avoid any expensive, time-consuming mistakes, it’s important to plan early. Make sure you have all of your supporting documents and data ready well in advance of the due date. If it’s your first time filing a corporate tax return in the UAE, you could even do a dry run beforehand, where you create a mock tax return to ensure you’re ready.
Digital tax tools can help streamline data collection and submission too. But for the best chances of making the process as efficient as possible, we recommend seeking professional guidance. At Set Hub, we work with corporate tax experts who are best positioned to help you prevent errors and ensure compliance with UAE tax regulations, saving you a huge amount of hassle.
About Set Hub.
The UAE corporate tax return process is by no means intuitive. It requires careful planning and a good understanding of reporting requirements, tax reliefs, elections and transfer pricing rules. That’s where Set Hub can help.
As experts in business setup in Dubai, we help entrepreneurs bring their ideas to life, efficiently and affordably. Based in the UAE, our team of more than 80 experts can help you on your business setup journey, from licensing and company setup, to banking and corporate tax filing assistance and beyond. If you’re looking for help with your corporate tax return or simply want to find out more about how we can help you, get in touch with us today.
