How to prepare for corporate tax return in UAE 2025

How To Prepare for Corporate Tax Filing in the UAE?

The UAE has completely transitioned into the corporate tax era, making a paradigm shift in the country’s business landscape. With the introduction of corporate tax regulations, businesses now should adapt to the new tax regulations, compliance requirements, and adhere to financial standards to ensure compliance and smooth operations.

Corporate Tax in the UAE

The corporate tax regulations were officially introduced by FTA  in UAE in June 2023 and imposes a corporate tax rate of 9% on taxable income exceeding AED 375,000 for businesses, with exemptions.

Businesses operating in the UAE are required to be aware and well informed about the corporate tax regulations. The introduction of corporate tax in the UAE marked a notable shift in the fiscal policy. As a member of the Organisation for Economic Co-operation and Development (OECD), the UAE is committed to align with international standards and enhance tax transparency to avoid tax base erosion. However, the UAE is still sparing no effort to maintain its attraction as a business hub.

The UAE companies should register for corporate tax based on a timeline set by the FTA based on their incorporation month and file for return within 9 months at the end of the financial year.

Steps To Prepare for Corporate Tax Return Filing

Get prepared for the corporate tax return filing now and avoid last-minute stress. With proper knowledge and preparation, you will be able to maximize your return, utilize deductions, avoid penalties and ensure hassle-free corporate tax filing process. Let us help you get ready for the tax filing with our solid checklist for corporate tax return filing in UAE:

1. Maintain Accurate Financial Records

Companies should prepare their financial statements for the tax period in accordance with the International Financial Reporting Standards (IFRS).

Small and medium Enterprises Can adopt IFRS for SMEs with reduced complexity and compliance requirements. Whereas larger enterprises should adopt the Full IFRS standard for financial reporting.

So, it is crucial to ensure that your financial records are up-to-date, and maintain meticulous records of all transactions including expenses, assets and income.

When it comes to categorizing expenses and income, following elements should be taken into account:

• Source of Revenue
• Operational Cost
• Detailed Asset Registers
• Loans, Liabilities & Interest Payments

2. Calculate Taxable Income

The UAE corporate tax will be calculated based on the net profit reported in the organization’s financial statements. It is categorized into taxable and non-taxable income. Taxable income will exclude deductible expenses, income exemptions, tax credits, and tax losses under certain conditions.

3. Categorize Deductible Expenses

According to UAE corporate tax regulations, some of the expenses will be deductible, within the specified range. By satisfying certain conditions, companies can be able to maximize deductible expenses and reduce their taxable income.

A range of expenses are eligible for deductions, however certain conditions and limitations apply for specific categories.

• Deductible Expenses
• Employee salaries & end-of service benefits
• Business-related travel costs
• Depreciation on assets
• Professional Services, Such as Accounting or Legal Services Fees
• Non-Deductible Expenses
• Personal Expenses
• Penalties
• Dividends to Shareholders

4. Understand Transfer Pricing Requirements

If a business in the UAE has transactions with related parties and connected parties, it must adhere to transfer pricing regulations. These transfer pricing rules are applied under arm’s length. To comply with transfer pricing rules, you need to

·         Maintain a records of all related-party transactions

·         Implement a transfer pricing policy that matches with the FTA guidelines

·         Gather supporting evidence, such as agreements & market analysis.

In case of failure to maintain the related party transaction records, business may lead to investigation during audits.

5. Avail Suitable Tax Incentives

Corporate Tax regulations offer tax incentives for certain taxable persons while meeting specific criteria. It is essential for businesses to understand the eligibility to utilize tax incentives under corporate tax regulations. Corporate tax incentives are offered in various categories such as Small Business Relief, Qualifying Free Zone Persons (QFZPs), Business Restructuring Relief, Foreign Tax Credits, Loss CarryForward Provisions and more. Businesses aiming to utilize these tax benefits, must verify whether they are eligible for the incentive and have a suitable tax strategy to make the most of the incentives available.

6. FisCal Year Closing Financial Statements

Based on the Tax Procedures Law, companies are required to prepare their financial reporting based on IFRS and give a clear summary of the organization’s financial position. All the supporting documents should be disclosed with the accounting records, during any FTA assessment. The records include:

•     Balance Sheet
•         Profit & Loss Statement
•         Cash Flow Statement
•         Notes & Disclosures
•       & other relevant documents

It is highly important to check the accuracy and completeness of all the financial statements as they will be considered for decision-making, tax filing, and various other purposes.

Common Mistakes to Avoid When Filing CT Return in UAE

Once you’ve gathered all the documents for corporate tax filing and calculated taxable income, you need to file your tax returns to the FTA. But before that, you need to consider certain factors to avoid mistakes during tax filing, as minor errors could cause hefty penalties.

Most of the businesses do the following mistakes during tax filing process, let us provide you some the tips to avoid them:

Missing Tax Deadlines – Most common mistakes taxpayers make is missing their filing deadlines and facing penalties. So, it is better to have a tax calendar with crucial deadlines and set reminders to file your taxes on time.

Inexact Division of Income & Expenses – All the financial transactions should be classified correctly. Errors in categorizing income, deductible expenses and non-deductible expenses will lead to incorrect calculation of taxable income. If you find it difficult, it is better to seek help from a professional tax agent to ensure accurate classification.

Overlooking Transfer Pricing Rules – It is crucial to stay informed about the transfer pricing regulations and failure to obligation will lead to top compliance issues.

Failure to Utilize Deductions or Exemptions – Most companies land up with higher tax liabilities as they fail to take advantage of the deductions or incentives applicable to their business. A tax consultant will help you benefit from

Lack Of Tax Planning – Do not wait till you approach the tax filing date to evaluate tax obligations which will result in filing errors. Have a solid year-round tax planning to utilize tax benefits, saving opportunities and hassle-free corporate tax filing.

Neglecting Professional Help – If you find it difficult to navigate the tax regulations and unsure about incentives, deductions or credits, seek help from a professional corporate tax consultant in UAE. They will help you handle the complexities in tax compliance and ensure a smooth filing process.

File Your Corporate Tax Confidently with the Help of a Professional Tax Consultant!

Before filing your corporate tax return, it is important to understand the implications of tax for your business, make the most of incentives, optimize your tax planning strategy and make informed decisions to maximize returns from tax filing.

FAQ

How to file a corporate tax return in the UAE?

The corporate tax filing in UAE should be done through the FTA portal: EmaraTax. Before filing for corporate tax returns, taxable persons should ensure that they meet all tax requirements.

Who needs to file for corporate tax in the UAE?

The FTA requires all the companies operating in the (including free zone and mainland) file for corporate tax on their taxable income as per corporate tax regulations.

What is the corporate tax assessment in UAE?

The corporate tax is calculated based on the net profit shown in the company’s annual financial statements. The corporate tax rate will be 9% if the taxable income exceeds AED 375,000 and 0% for below AED 375,000.

What is the deadline for filing UAE corporate tax returns?

The deadline for filing corporate tax returns will be determined by FTA based on the fiscal year. Stay updated with FTA announcements or consult a corporate tax consultant to know your corporate tax return filing deadline.

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