Deadline for Corporate Tax Return Filing in UAE

As the UAE's corporate tax landscape evolves, businesses are facing new challenges in ensuring compliance, especially when it comes to filing corporate tax returns. With the introduction of corporate tax in 2023, businesses are now required to file their corporate tax returns starting from their financial year beginning on or after June 1, 2023. Missing these deadlines can result in hefty penalties, and confusion around filing procedures could cause unnecessary financial strain, which is why knowing the specific filing dates and the process is crucial for businesses to remain compliant and avoid any unnecessary expenses.

In this blog, we will guide you through the critical deadlines for corporate tax return filing in the UAE, including the key steps involved in the filing process, registration requirements, penalties for missing deadlines, and helpful tips for staying compliant.

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What is Corporate Tax in UAE?

Corporate tax is a direct tax imposed on the net income or profits of corporations and other business entities. It is governed by Federal Decree-Law No. 60 of 2023, which amends certain provisions of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses.

When to File Tax Return in UAE: Key Deadlines

The deadline for filing corporate tax returns in the UAE is typically set for nine months after the end of a company’s fiscal year. This means that businesses need to submit their tax returns before the deadline in order to avoid facing penalties.

Special Cases and Extensions

Certain companies may qualify for extended filing deadlines, particularly those in specific sectors or those facing exceptional circumstances. For example, businesses in some Free Zones or those applying for exemptions may benefit from additional time to submit their returns. The UAE government has been known to extend filing deadlines under certain conditions, which provides businesses with additional flexibility. 

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Registration Requirements and Filing Deadlines

For newly established businesses, the filing deadlines will still apply from the end of their first fiscal year. It’s important to register for VAT if your supplies exceed the mandatory registration threshold of AED 375,000, as this determines your filing obligations.

Corporate Tax Return Filing Process

Filing corporate tax returns in the UAE involves a series of steps that must be completed in a timely and accurate manner. The process ensures that businesses comply with the UAE’s corporate tax laws while accurately reporting their tax liabilities. Here is an outline of the procedure for filing corporate tax returns in the UAE:

1. Ensure Tax Registration

The first step in the filing process is ensuring that your business is registered with the Federal Tax Authority (FTA). Your company must have a valid Tax Registration Number (TRN), which is required for filing corporate tax returns. If your company is not yet registered, you will need to complete the registration process through the FTA’s online portal.

2. Gather Required Documents

To prepare your corporate tax return, you must gather all relevant documents. These include company registration documents, financial statements, and tax-related records. Ensure that the documents are accurate, complete, and reflect the relevant tax period for your return.

3. Prepare the Tax Return

Using the FTA’s official corporate tax return forms, or appropriate tax software, you will calculate your taxable income. During this process, you must consider any applicable tax deductions and exemptions under the UAE’s corporate tax regulations. For example, you may need to account for depreciation, provisions, and related party transactions. Be sure to attach all supporting documentation for deductions and exemptions claimed.

4. Submit the Tax Return

After preparing the tax return, complete the declaration section, confirming that all information provided is accurate. Once this is done, you can submit your corporate tax return via the FTA’s e-Services platform. Ensure that you submit the return on or before the due date to avoid any penalties.

5. Confirmation and Payment

Upon successful submission, you will receive an acknowledgment or confirmation receipt from the FTA. If your business has a tax liability. Payment details and deadlines will be provided by the FTA on their portal.

6. Maintain Records

After filing your tax return, you must retain all documents used in the preparation of the tax return for at least five years. The FTA may request these documents for audit or verification purposes, so it’s important to keep accurate and organised records.

Accurate and timely UAE corporate tax returns are essential for compliance. Working with tax specialists can help safeguard your business against filing errors.

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Penalties for Late Filing

The Ministry of Finance has announced the issuance of Cabinet Decision No. 10 of 2024, which amends the penalties schedule in Cabinet Decision No. 75 of 2023. These amendments pertain to violations of Federal Decree-Law No. 47 of 2022 concerning the taxation of corporations and businesses. Cabinet Decision No. 10 of 2024 introduces various penalties for businesses that fail to comply with corporate tax registration and filing requirements. Below are the key penalties businesses should be aware of:

1. Late Corporate Tax Registration Fine

A penalty of AED 10,000 will be imposed on businesses that fail to register for corporate tax within the timelines set by the Federal Tax Authority (FTA). This fine applies to businesses that do not submit their registration applications on time, and it is intended to ensure that all companies are properly registered under the corporate tax system.

2. Late Corporate Tax Deregistration Fine

If a business fails to deregister for corporate tax on time, it will incur a penalty of AED 1,000 for the first month, increasing by AED 1,000 each month until it reaches a maximum penalty of AED 10,000. This penalty encourages businesses to keep their tax registration status up to date and ensures that deregistration is processed promptly when no longer required.

3. Failure to Maintain Proper Records

Businesses are required to keep accurate and up-to-date records as stipulated by the corporate tax law. Failing to do so will result in penalties:

• AED 10,000 for each infraction.
• AED 20,000 for repeated offenses committed within 24 months of the previous violation. This penalty emphasises the importance of maintaining thorough and current records.

4. Late Corporate Tax Return Submission Fine

If a business does not submit its corporate tax return on time, it will incur the following penalties:

• AED 500 per month (or part thereof) for the first 12 months.
• AED 1,000 per month (or part thereof) from the thirteenth month onwards. The penalty begins the day after the due date and continues until the return is submitted.

5. Unsettled Payable Corporate Tax Fine

If a business fails to settle its corporate tax on time, it will be charged an annual penalty of 14% on the outstanding payable tax. This is calculated monthly from the due date of payment. This penalty aims to encourage businesses to settle their tax liabilities promptly.

6. Incorrect Corporate Tax Return Submission Fine

Businesses that submit incorrect tax returns will incur a fine of AED 500. However, this fine can be avoided if the business corrects the tax return before the submission deadline, as per the corporate tax law.

7. Late Submission of Corporate Tax Declaration

If a business fails to submit its corporate tax declaration to the FTA on time, the following penalties apply:

• AED 500 per month for the first 12 months.
• AED 1,000 per month from the thirteenth month onwards.

8. Failure to Submit Tax-Related Data in Arabic

Businesses must submit their tax-related data, records, and documents in Arabic when requested by the FTA. Failure to comply with this requirement will result in a fine of AED 5,000.

9. Failure to Facilitate Tax Auditors During an Audit

If a business does not cooperate with tax auditors during a tax audit, it will face a fine of AED 20,000. This penalty ensures that businesses comply with audit processes and facilitate the timely resolution of any audit inquiries.

These penalties highlight the importance of timely and accurate corporate tax filings in the UAE. It is essential for businesses to adhere to the deadlines set by the FTA and maintain proper records to avoid incurring these costly fines.

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Recent Amendments in Corporate Tax Filing

On 25 September 2024, the Federal Tax Authority (FTA) issued Decision No. 7 of 2024, announcing an extension of the corporate tax return and payment deadlines. The new deadline, set for 31 December 2024, applies to taxable persons whose tax periods ended on or before 29 February 2024. This extension offers businesses more time to file their corporate tax returns and settle liabilities without facing penalties.

The FTA further clarified these changes with a Public Clarification on 10 October 2024. The clarification provides additional guidance on the revised filing deadlines, specifically highlighting practical scenarios for businesses affected by this new schedule. It is advisable for businesses to consult earlier communications from the FTA, including those released on 12 August and 12 September 2024, to fully understand the determination of the first tax period for juridical persons and how it relates to the filing and payment deadlines.

December 2024 Deadline for Specific Taxable Persons

The 31 December 2024 deadline primarily affects two groups of taxable persons:

1. Businesses with a Short Tax Period: This applies to entities that ceased to exist due to liquidation, cessation, or other reasons on or before 29 February 2024.
2. Businesses Incorporated Between June and September 2023: This group includes companies incorporated between 1 June 2023 and 1 September 2023 that follow specific financial years. These businesses, which have a short tax period ending by 29 February 2024, are also granted the extension until 31 December 2024.

This extension allows businesses in these categories to better align their filing processes, ensuring compliance without rushing to meet previous deadlines.

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Common Mistakes and How to Overcome Them

Filing corporate tax in the UAE can be a complex process for many businesses, particularly due to the newness of the tax system, evolving regulations, and the need for accurate financial documentation. Here are some common mistakes that businesses may face and how they can effectively overcome them:

1. Lack of Knowledge and Understanding of Corporate Tax Regulations

One of the most significant challenges for businesses is understanding the intricacies of corporate tax laws and how they apply to their specific circumstances. The UAE's corporate tax system, though straightforward, is new and subject to updates.

Solution: Businesses should work closely with VAT consultants or tax experts who can provide up-to-date information on tax law and ensure compliance. It's also essential to continuously educate internal teams on tax requirements, especially when it comes to complex matters like exemptions, taxable income, and deductions.

2. Maintaining Accurate and Detailed Financial Records

Many businesses struggle to maintain accurate financial records in a manner that complies with UAE regulations, especially when dealing with complex financial transactions.

Solution: Implementing a robust accounting system and using accounting software that integrates with tax reporting tools can streamline the record-keeping process. Regular audits and reconciliations will ensure that the records are accurate and ready for tax submission.

3. Timely Submission of Returns

Missing deadlines or submitting incomplete information can lead to fines and penalties, which can disrupt cash flow and cause reputational damage.

Solution: Setting internal deadlines well in advance of the actual tax filing deadline and establishing a clear filing schedule can help. Additionally, businesses can use reminders or automated tools for tax filing to prevent last-minute rushes. Consulting a tax professional ensures that the submission is timely and compliant.

4. Failure to Meet VAT Requirements for Corporate Tax

The UAE's corporate tax regime is closely linked with VAT regulations. Failure to comply with both tax systems can lead to errors and penalties.

Solution: Ensure your business complies with both VAT and corporate tax regulations by integrating VAT management tools and platforms. Tax consultants can help align VAT and corporate tax obligations, ensuring all returns are filed accurately and on time.

5. Not Understanding the Impact of Free Zones

Companies operating in Free Zones may face confusion over the unique tax rules applied to them, including exemptions and zero-rated supplies.

Solution: Free Zone businesses should review the guidelines regularly and seek advice from consultants familiar with the nuances of Free Zone tax laws to avoid costly mistakes.

By addressing these challenges proactively, businesses can simplify the corporate tax filing process, avoid penalties, and ensure compliance with the UAE’s tax laws.

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Optimising Corporate Tax Filing with Alaan

One of the most effective ways to streamline your business operations and ensure accurate tax compliance is by automating expense management through a robust spend management solution like Alaan. Here’s how we can benefit your business:

• Identify Tax-Deductible Expenses: At Alaan, we make it easy to identify tax-deductible expenses while managing your cash flow in real time. This helps optimise tax savings.
• Ensure VAT Compliance and Simplify Reporting: We handle VAT calculations automatically and optimise workflows such as data collection and validation. Our integrated tools simplify managing and filing VAT returns, empowering educational institutions to confidently stay compliant with UAE VAT regulations.
• Save Time and Reduce Errors: Our automated systems eliminate manual errors that often lead to costly mistakes in tax filing. 
• Gain Valuable Financial Insights: We offer insights into where your company is spending its money. By identifying areas of unnecessary spending, you can implement strategic cost-saving measures that positively impact your bottom line.

Preparing for UAE corporate tax filing isn’t just about meeting compliance requirements—it’s about using the process as an opportunity to enhance your business operations, optimise efficiency, and improve profitability. With Alaan, you can confidently manage your expenses while positioning your business for long-term success.

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Conclusion

Meeting the deadlines for corporate tax return filing is critical for any business in the UAE. Understanding the filing process, the importance of accurate reporting, and the consequences of late submissions is essential for maintaining tax compliance and avoiding penalties. By staying informed and planning ahead, businesses can ensure that their tax returns are filed on time, minimising the risk of costly fines.

Book a free demo today to discover how Alaan can help your business automate expense management, optimise cash flow, and streamline corporate tax filing for greater efficiency and compliance.