As the year-end approaches, entities must prepare for a smooth closing of books. Closing the books is generally associated with accounting; however, it is also linked to tax preparation and filing. In the UAE, most businesses close their books on 31st December. Therefore, it is important to recall corporate tax responsibilities. According to the tax law, businesses must file corporate tax returns within nine months from the end of the relevant tax year. In this blog, we primarily discuss the UAE corporate tax deadline and its impact on businesses if they miss the filing deadline.
UAE Corporate Tax Deadline
As per Articles 48 and 53 of the corporate tax law:
“A Taxable Person must settle the corporate tax payable within nine (9) months from the end of the relevant Tax Period, or by such other date as determined by the Authority.”
“A Taxable Person must file a tax return, as applicable, to the Authority in the form and manner prescribed by the Authority no later than nine (9) months from the end of the relevant tax period, or by such other date as directed by the Authority.”
Thus, if an entity has a tax year ending on 31st December 2025, it must file a tax return and pay the relevant tax liability by 30th September 2026. Entities must prepare well in advance to ensure the timely submission of returns.
How to Meet the Corporate Tax Deadline Efficiently
Meeting the UAE corporate tax deadline may seem like a one-off duty; however, it involves a detailed process. Firstly, entities must prepare and close the books. This process involves reconciling accounts, making adjusting entries, preparing a trial balance, and finalizing the financial statements.
Most firms start this process after year-end, but proactive entities maintain up-to-date records. Only after finalizing accounts can businesses move on to tax preparation and filing. To stay organized and avoid last-minute stress, businesses must ensure a timely closing of books.
The accounting income or loss is then adjusted for tax deductions, adjustments, and incentives to arrive at taxable income. The next step is filing the tax return.
Key Steps for Smooth Tax Return Submission
Every entity should follow these key steps for a compliant tax return submission:
a. Corporate Tax Registration
For new or unregistered businesses, the first step is submitting a corporate tax registration application. Verify whether registration is required for your business by contacting CZTA. The registration must be submitted within the stipulated deadline. Failing to meet the registration deadline incurs a hefty penalty of AED 10,000.
b. Maintain Accurate Records
Taxable income is calculated based on accounting records. Accurate accounting records ensure accurate taxable income and tax liability. Records must comply with UAE laws and generally accepted accounting standards, such as IFRS.
c. Calculate Taxable Income
Accounting income and taxable income may differ. To calculate taxable income, start with net income or loss and adjust for deductions, reliefs, and other adjustments.
d. Supporting Documents
Taxable entities must submit relevant documents along with the tax return. These documents should allow the tax authority to calculate the tax liability independently. Documents generally include, but are not limited to:
- Financial statements
- Tax depreciation schedules
- Related-party transaction details
- Taxable income calculations and other relevant documents
e. Submit & Settle Tax Liability using the EmaraTax Portal
Submit the completed tax return and documents via the EmaraTax Portal. The system calculates the tax liability based on the submitted information. Finally, pay and settle the corporate tax liability using supported payment methods.
Payment of tax liability is not the end of compliance responsibilities; businesses must continue complying with tax laws on an ongoing basis.
Don’t Miss the Deadline – What Happens if You Do?
There are penalties for missing tax return submission and tax liability payment deadlines:
- Missing the tax return submission deadline incurs AED 500 per month (or part thereof) for the first 12 months, and AED 1,000 per month from the 13th month onwards. Penalties apply from the day following the expiry of the applicable timeframe and recur monthly on the same date.
- 14% per annum of unpaid taxis due monthly, starting the day after the due date.
- Submitting an incorrect tax return results in a AED 500 penalty. Correcting the return before the due date, as per the law, incurs no penalty.
Start Early – Reap the Benefits
Proactive planning throughout the year offers several benefits:
- Avoid Penalties: Avoid hefty fines by submitting returns on time.
- Tax Savings: Identify and claim tax incentives on time.
- Better Cash Flow Management: Estimate cash outflows due to tax liabilities in advance.
- Audit Readiness: Keep documentation ready for year-end audits.
- Smooth Business Operations: Ensure smooth operations and compliance.
Conclusion
As December approaches, it is crucial to prepare for UAE corporate tax filing and avoid missing deadlines. Timely submission of tax returns and payment of liabilities reflects a business’s commitment to compliance. Missing deadlines can result in hefty fines, penalties, and operational disruption.
Starting early provides benefits beyond avoiding penalties, including better cash flow management and overall operational efficiency.
Creative Zone Tax & Accounting (CZTA)
At CZTA, we believe compliance extends beyond deadlines. Meeting timelines is a fundamental responsibility. Our qualified team ensures that your filings are accurate, timely, and aligned with UAE tax laws. If you are unsure about the UAE corporate tax deadline or have missed a submission, contact us for expert guidance. Reach out today!
