One of the prime business tax responsibilities is to file the corporate tax return timely and in compliance with laws. As the year-end approaches, UAE firms are heading towards a looming tax return deadline. The specific deadline of a business depends on its financial year. However, the general guidance is that it is nine months from the end of the relevant tax period.
Most entities follow the calendar year as their accounting year; therefore, 31st December is the closing date for most businesses. In this case, the tax return must be submitted by September 30, 2026, nine months from December 31, 2025. However, firms must prepare well in advance for a smooth submission. In this blog, we focus on what firms must do at this time and prepare for a key tax responsibility.
What is a Corporate Tax Return?
The UAE tax law defines a tax return as:
“Information filed with the Authority for Corporate Tax purposes in the form and manner as prescribed by the Authority, including any schedule or attachment thereto, and any amendment thereof.”
A tax return is generally a form in which details of income, expenses, and other taxation details are provided. This, in turn, will calculate the final tax liability that is due to the UAE government. Any attachments, schedules, and amendments are also submitted along with the tax return. Furthermore, any relevant information or documentation requested by the Authority is also provided with corporate tax returns. Apart from the general information of an entity, a return needs the following information.
- The taxable income for the relevant tax period.
- The amount of tax loss relief claimed under Article 37 of the tax law.
- The amount of tax loss transfer under Article 38 of the tax law.
- Any tax credits claimed under Articles 46 and 47 of the tax law.
- The resultant corporate tax payable for the tax period.
Corporate Tax Return’s Deadline Calculation
As we discuss the looming tax return deadline, how do we calculate the exact date for a business? Subject to corporate tax registration, a business must file a tax return no later than 9 months from the end of the relevant tax period or any other date prescribed by the authority. However, the tax return should be in the form and manner as per the guidelines of the tax authority.
Example of a Tax Return Deadline Calculation
Financial Year-end: 31st December, 2025.
Calculation: (31st December, 2025) + 9 months
Tax Return Deadline: 30th September, 2026.
It is worth noting that the deadline to settle the tax liability is the same.
Why Businesses Should Prepare Early?
One of the major steps towards fulfilling tax responsibilities is closing the books of accounts timely. Delaying financial statements and the supporting documentation will result in last-minute panic and a rush. Therefore, to streamline everything, from gathering & preparing schedules to aligning accounts with tax regulations and computing tax liability, it is important to work proactively. In this way, you will have a lower risk of missing the deadline and facing the penalty.
To minimize the risk of late filing and avoid penalties, it is necessary to keep everything aligned. The following penalties are applicable in this regard:
- Failure to file a tax return within the timeframe:
AED 500 per month, or part thereof, applies up to the first 12 months if the registrant fails to file a tax return within the timeframe as per corporate tax law. However, AED 1,000 per month or part applies from the 13th month onwards.
- Failure to settle tax liability within the timeframe:
14% (per annum) of unpaid tax is due monthly on the day following the due date and on the same day every month.
- Submitting an incorrect tax return:
AED 500 applies if a registrant submits an incorrect tax return. However, correcting the tax return before the due date, as per the tax law, results in no penalty.
For detailed information on fines, see Corporate Tax Penalties.
What Do Entities Need to Get Ready for Smooth Tax Return Submission?
As the tax return deadline is looming, firms should prepare well in advance. This, in turn, will keep everything organized without distracting the core business functions. Businesses must strive to prepare the following for smooth tax return filing.
1. Check for Corporate Tax Registration Status
It is important to ensure the tax registration status is active with the Federal Tax Authority (FTA). As a taxable person, failure to register for corporate tax within the applicable timeline will result in a hefty fine of AED 10,000.
2. Close and Finalize the Books in Time
Some businesses have a legal obligation to have mandatory audited financial statements. Therefore, depending on your legal standing, prepare and get your financial statements ready for filing.
3. Gather & Prepare Documentation
The tax filing process needs documents and schedules to be attached. This may include related party adjustments, reconciliations, and adjustments to corporate tax liability due to tax incentives, and so on.
4. Cash Flow Planning
Small businesses usually don’t plan for the cash outflow as a result of tax liability. This is mainly because of low tax liability, uncertain business conditions, tax incentives, and so on. However, depending on the respective circumstances, it is important to plan for tax payments and arrange funds in advance. This, in turn, will reduce the risk of late tax filing and any payment surprises!
5. Arrange for Records Maintenance
Your business must keep the documents intact for a period of 7 years from the end of the relevant tax period. However, certain categories of businesses, such as real estate, may require longer retention of documents. Therefore, as a responsible taxable person, you must prepare for the safe and secure preservation of documents.
6. Other Legal Obligations
Our list above is not inclusive. There can be other requirements, including documents, depending on the nature of the business. For instance, some firms may need extensive documentation concerning the related party and transfer pricing.
Final Words
On a business compliance calendar, the top priority is filing the return and settling the tax liability. However, there is a looming tax return deadline; therefore, it is important to plan and prioritize individual duties. There is no conclusive list of duties available; however, we mentioned some of the key responsibilities that will minimize the risk of late filing and penalties.
For instance,
- Closing the books in time and preparing the financial statements will result in key information ready for tax preparation.
- Furthermore, gathering and preparing the documents is one of the key compliance responsibilities.
Therefore, firms must start working on gathering documents, especially the ones that are external to the organization.
The key here to understand is that “proactive working” is the need. Get things ready in time and avoid the rush in the last moments. As a result, you will minimize the risk of late filing and hefty penalties. Moreover, the business on the whole will be running smoothly without any distractions.
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