What to Expect in the First Tax Return | Corporate Tax | UAE

Corporate tax return filing is the process through which businesses disclose their incomes, expenses, and other relevant financial information to the tax authorities of their respective countries. This process determines the calculation of the amount of tax a company owes to the government based on its taxable income for the relevant tax period. 

Filing Deadlines and Registration 

Businesses in the UAE are required to submit their corporate tax returns and make necessary payments to the FTA within nine months from the end of relevant tax period. For instance, a company with tax period beginning on January 1, 2024, has a deadline of September 30, 2025. 

To start the corporate tax return filing process in the UAE, companies must first register themselves on the EMARA TAX PORTAL (PORTAL) and obtain a tax registration number (TRN) from the Federal Tax Authority (FTA). This requires furnishing the requisite documents and information requested on the PORTAL.  Once registered, businesses must maintain accurate and comprehensive records of all financial transactions and tax-related documents in line with UAE Corporate Tax Law (i.e. UAE CT Law). 

Preparing the Tax Return 

When drafting the tax return, the companies should calculate their taxable income carefully and ensure they account for any available tax deductions and exemptions. The tax return should be submitted on the PORTAL, before the due date to ensure compliance. 

Transfer Pricing Considerations 

Companies must also disclose details related to transfer pricing as part of their tax filings. This ensures that intercompany transactions as well as connected persons transactions are undertaken at arm’s length price i.e. at the fair market value and are in compliance with the UAE CT Law.  

Specifically, taxable persons must consider transfer pricing requirements when setting prices and terms for transactions which involves documenting and reporting the methods used to determine prices for goods, services, or intangible property transferred between related parties or connected persons and accurately report these outcomes on their tax returns as well as the Disclosure Forms for transfer pricing. 

What to Expect During the First FTA Audit 

The subsequent question which arises is that what should the taxpayers expect during the first FTA Audit post furnishing of the CT Return. We anticipate that aspects around payments to connected persons, payments received or payments made towards intangibles as well as related party transactions undertaken by taxpayers involved in the real estate sector as well as the distribution sector may be cherry picked during the FTA Audit since these aspects seem highly litigative due to the quantum i.e. huge volume of transactions entered into by UAE based taxpayers as well as due to the sensitivity of the transactions involved. 

Ensuring Compliance and Transparency 

Accordingly, during the FTA audit, the businesses should be prepared to furnish/present comprehensive information (within the reasonable time permitted by the FTA) on their corporate tax as well as transfer pricing aspects as and when requested by the FTA, so as to be compliant with the UAE CT Law and avoid any penal provisions being invoked by the FTA. 

Ensuring compliance and transparency throughout the process will help companies maintain a good standing with the FTA. By taking these steps, businesses can establish a solid foundation and ensure long-term financial stability. 

Credits

• Mr. Medhat Elabd 

• Ms. Aditi Bhoj 
• Mr. Milan Abraham 

Summary

Corporate tax return filing in the UAE requires businesses to report their financial activities to the Federal Tax Authority (FTA) to determine tax owed. Companies must submit their returns within nine months of the tax period’s end and register on the EMARA Tax Portal for a Tax Registration Number (TRN). Accurate record-keeping and compliance with transfer pricing rules are essential. During the first FTA audit, businesses should be ready to provide detailed information, especially on high-volume transactions, to avoid penalties and maintain compliance with UAE tax laws. 

Disclaimer: The Content offer general guidance and should not be considered legal, financial, or tax advice. Consult qualified professionals for personalized guidance. While efforts have been made to ensure accuracy, no guarantee is provided for completeness or applicability to individual situations. Users are responsible for their interpretation and actions based on this information, at their own risk.