First-Time Corporate Tax Filing in the UAE – Beginner Guide

The corporate tax regime is comparatively new in the UAE; therefore, most businesses will be submitting their first tax return. However, first-time experience usually leaves a mark; therefore, it is important to put the blocks right and avoid any negative outcome. No doubt, in the UAE, the law is clear, and there is official guidance available to cater to businesses; however, it is not a bad idea to consult a local tax expert. This, in turn, will avoid any non-compliance issues and also keep your business on track without interruption in your operations. Let’s understand what’s needed or important for first-time corporate tax filing in the UAE.

What is Required for First-Time Corporate Tax Filing in the UAE?

Most businesses in the UAE are required to file the corporate tax return even if they do not make any profit. However, there are some primary requirements before an entity can actually file the tax return. The first and foremost responsibility is to register for corporate tax in the UAE and obtain the tax registration number (TRN). There is a deadline for registration, which is specific to a business and the date of its incorporation. For instance, for a resident juridical person incorporated, established, or otherwise recognized in the UAE after March 1, 2024, it must apply to register for corporate tax within 3 months from the date of incorporation or establishment. For further details, read corporate tax registration deadlines.

Furthermore, as a first-timer, it is important to keep everything in order and avoid any errors that recur in the future. Therefore, entities should:

• Maintain proper bookkeeping and accounting records aligned with the UAE tax laws.
• Prepare supporting documents relevant to the corporate tax filing and computation.
• Make arrangements to archive documents for a specified period of time.
• Understand and review applicable exemptions, reliefs, and tax deductions applicable to your business.
• Review applicable tax laws and regulations.
• Onboard a tax consultant to keep everything in order, such as CZTA.

When Must Businesses File Their First Corporate Tax Return?

Once registered, the next step is the first corporate tax return. The process is online; it is submitted on the EmaraTax portal. However, the ultimate question is when the deadline to submit the tax return is. The deadline is not generic; it is dependent on an entity’s relevant financial year. As per the UAE corporate tax law, it is nine months from the end of the relevant tax period. Let’s understand with an example.

Suppose a business has the first financial year-end on 31^st December, 2025. The corporate tax filing deadline will be after nine months from the year-end, which is 30^th September, 2026. The entity must work and prepare well in advance of the deadline to avoid last-minute panic and non-compliance. Thus, everything, from the date of incorporation to the financial year-end and the corporate tax filing deadline, is interconnected. Failure to comply with the deadline will result in penalties.

What Documents and Records are needed for Corporate Tax Filing?

As a general guideline, entities must maintain documents that support the figures posted in the corporate tax return and enable the tax authority to compute the tax liability on its own. However, the following is a list of common documents and records that businesses might need to comply.

• Tax registration and other legal documents
• Financial statements
• Sales invoices
• Purchase invoices
• Bank statements
• Related party documentation (if applicable)
• Payroll records
• Other records as required.

Record-Keeping for Corporate Tax

As per Article 56 of the tax, a taxable person must maintain documents and records for a period of seven years (7) from the end of the relevant tax period. These include documents and records that:

1. Support the information provided in the tax return
2. Enable the tax authority to readily ascertain the taxable income.

What Mistakes should Businesses Avoid during their First Filing?

If everything goes well in the first filing, there is a higher probability of success in the future years. This is mainly because if the stage is set well, it is easier to file taxes in the future. However, mistakes can happen irrespective of the size, stage, and nature of the business. Therefore, it is important to learn about those mistakes beforehand and make arrangements to avoid them. Some common mistakes entities make in the course of their first filing are:

Missing the Deadlines

In the UAE, keeping up with the deadlines is important to avoid penalties. We are not only referring here to just meeting the filing deadline, but even missing the corporate tax registration deadline results in a hefty penalty of AED 10,000. There is a penalty waiver; read for further information.

Poor Accounting Records

To comply with the corporate tax regime, entities must make arrangements to keep their books in order. The accounting function, bookkeeping primarily, is the backbone of corporate tax liability computation. Therefore, any errors in the books will reflect in the tax return. Thus, there will be higher chances of non-compliance and applicable penalties.

Poor Documentation

Firms must attach the relevant documents to the tax return. Furthermore, they must retain the documents for a specified period, i.e., seven years from the end of the relevant tax period. Therefore, non-awareness in this regard will result in non-compliance.

Not Claiming Tax Incentives

In the UAE, there is a decent amount of tax incentives available specifically for small businesses. Therefore, not claiming the tax exemptions, reliefs, and deductions where applicable will indirectly result in opportunity cost and loss of a potential tax benefit.

Not Onboarding a Tax Expert

Most businesses think that consulting a tax expert is not necessary or expensive in the beginning. However, it is the best time to onboard a tax consultant from the beginning. This, in turn, will keep things smooth and avoid the need to consult an expert in later complex situations. CZTA is one of the reputed tax firms in the UAE.

How can CZTA assist in First-time Corporate Tax Filing in the UAE?

With our experienced team and expertise in UAE taxation, we provide remarkable services concerning corporate tax registration & filing, VAT returns & filing, accounting & bookkeeping, and other related services. As a first-time filer, it might be difficult for you; however, with our expertise, we can simplify the overall process and let you focus on your core business activity. We will take care of all the tax incentives, deductions, and exemptions relevant to your business. Contact us today.

Frequently Asked Questions (FAQs)

Firms must register for corporate tax and obtain the tax registration number (TRN). As a first-timer, it is important to keep everything in order and avoid any errors that recur in the future. Therefore, entities should: