UAE Federal Tax Authority Launches Detailed Guide for Corporate Tax Compliance
Published 25 Nov 2024
The UAE Federal Tax Authority (FTA) has published a detailed resource designed to assist businesses in navigating corporate tax filing requirements. The guide aligns with the Federal Decree-Law No. 47 of 2022, which introduced corporate taxation effective from June 1, 2023. This initiative aims to simplify the tax return filing process while ensuring compliance with the UAE’s tax laws.
Source: Freepik
The guide provides clear instructions for taxpayers on completing corporate tax returns via the EmaraTax portal. It offers tailored guidance for various taxpayer categories, including free zone persons, juridical persons, and unincorporated partnerships.
What the Guide Covers: Key Components
1. Structure of the Corporate Tax Return
The guide breaks down the tax return into multiple sections and schedules:
Taxable person details. Pre-filled fields based on registration.
Elections. Options like small business relief and tax grouping.
Accounting schedule. Reporting accounting income and adjustments.
Exempt income. Reporting exempt income categories, including dividends.
Reliefs. Claiming business restructuring or group transfer reliefs.
Other adjustments. Adjusting for non-deductible expenses and related-party transactions.
Tax liability and tax credits. Finalizing tax dues and applying credits.
Review and declaration. Verifying and submitting the tax return.
Schedules. Supporting disclosures tailored to individual taxpayers.
2. Specialized Schedules
Taxpayers are guided through completing specific schedules based on their tax profiles. These include:
Free zone schedule. Required for qualifying free zone persons to report income splits and economic substance details.
Tax losses schedule. For reporting carried-forward losses or tax loss transfers.
Related party transactions schedule. Mandatory for transactions exceeding specified thresholds.
Foreign permanent establishment schedule. For taxpayers claiming exemption on overseas branch income.
3. Elections and Reliefs
The guide elaborates on elections such as:
Small business relief. Simplified tax obligations for businesses with less than AED 3 million in revenue.
Transitional rules. Adjustments for pre-tax period gains or losses.
Foreign permanent establishment exemption. Excluding qualifying income from foreign branches.
Key Compliance Points for Free Zone Persons
For free zone persons, the guide emphasizes specific requirements, including:
Income categorization. Separating qualifying income (taxed at 0%) from non-qualifying income (taxed at 9%).
Economic substance reporting. Disclosures on employees, expenses, and operational details.
Threshold compliance. Ensuring adherence to the 5% or AED 5 million de minimis threshold to maintain Free Zone tax benefits.
Revenue from Excluded Activities: Income derived from certain excluded activities can still count toward qualifying income, as long as it remains below the de minimis threshold.
Intellectual property. Free zone persons with qualifying intellectual property must report related income and expenditures from its exploitation, which includes royalties or income directly tied to qualifying IP assets.
Transfer pricing compliance. Businesses involved in related-party transactions must ensure they adhere to arm’s-length pricing principles and provide the necessary documentation, especially if transactions exceed the required thresholds.
Additional Information
Taxpayer Categories
The guide includes specific provisions for various taxpayer categories, such as:
Juridical persons. Guidelines for entities that are legally separate from their owners.
Unincorporated partnerships. Instructions for partnerships treated as separate taxable entities.
Non-resident persons. Special rules for non-resident taxpayers and their obligations to file in the UAE.
Estimated Figures and Voluntary Disclosure
Estimated figures. If taxpayers submit estimated data, they must disclose that the figures are provisional and can be corrected in future returns.
Voluntary disclosure. If errors exceeding AED 10,000 are identified in a prior return, taxpayers must voluntarily disclose these discrepancies to the FTA to avoid penalties.
Audited Financial Statements
For businesses with substantial revenues (e.g., exceeding AED 50 million), the guide specifies the requirement for submitting audited financial statements along with detailed auditor reports.
Tax Grouping
The guide also explains how tax groups can be formed for businesses under common ownership. Tax groups are allowed to file a single consolidated tax return, providing benefits in terms of tax efficiency and reporting.
Filing Deadlines
All tax returns must be filed within nine months of the end of the tax period. Failure to meet the deadline may result in penalties, so taxpayers are advised to plan accordingly to ensure timely and accurate submissions.
How to Access the Guide
The Corporate tax guide is available through the FTA’s official website and the EmaraTax portal. Taxpayers are encouraged to review the guide thoroughly to ensure compliance and leverage available reliefs.
By adhering to the guide’s instructions, businesses can file their returns accurately, avoid penalties, and optimize their tax outcomes under the UAE’s corporate tax framework.
By adhering to the guide’s instructions, businesses can file their returns accurately, avoid penalties, and optimize their tax outcomes under the UAE’s corporate tax framework.
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