Corporate Tax Period and Submission: All You Have to Know

Having knowledge of taxation is crucial for running any business. If you're operating a business in the UAE, it's important to understand the country's tax system, which now includes corporate tax. In this blog, we'll explore the basics of UAE corporate tax, including the tax period and submission deadline.

In order to align with international standards, the UAE government has introduced a new corporate tax structure. Traditionally, the UAE has relied heavily on its oil-based economy, but now it aims to change that by implementing this tax structure. The government has been investing in innovation and technology to diversify its sources of revenue and has also been making tax reforms to attract more businesses. This process began with the introduction of VAT in 2018 and has now progressed with the introduction of corporate tax. On January 31, 2022, the Ministry of Finance announced the implementation of UAE corporate tax, which is set to begin in June 2023, coinciding with the start of the new financial year.

Understanding the UAE Corporate Tax Period

The UAE corporate tax period refers to the specific timeframe during which a business is required to report its financial information and file tax returns. The UAE corporate tax period is usually aligned with the Gregorian calendar year, which means it follows the regular January to December timeframe. It can also be based on the twelve-month period for which the business prepares its financial statements.

If a business wishes to change its tax period, such as altering the start or end date or opting for a different time frame, it can submit a request to the tax authority. However, any changes in the tax period are subject to certain conditions and regulations established by the authority.

Deadline for UAE Corporate Tax: When and How to Submit

As per Article 51 of the Decree, businesses subject to UAE corporate tax must submit their tax returns to the authorities following the guidelines provided. It is important to note that the tax return should be filed within nine months from the end of the applicable UAE corporate tax period or by a date specified by the tax authority.

To better grasp the process, let's consider the following examples:

UAE Corporate Tax Period and Filing Deadlines based on Financial Year End

If a business's financial year ends on May 31st:

  • The Corporate Tax Law will take effect from June 1, 2023, and the first tax period will run from June 20, 2023, to May 31, 2024.
  • The deadline for filing the tax return for this period will be February 28, 2025.

 

If a business's financial year ends on December 31st:

  • Although the UAE Corporate Tax Law starts on June 1, 2023, it will be applicable to the business from the next financial year, beginning January 1, 2024.
  • The first tax period for such a business will span from January 1, 2024, to December 31, 2025.
  • The deadline for filing the tax return for this period will be September 30, 2026.

 To know more about Corporate Tax registration period and registration requirements, check out here.

Comments

Post a Comment

Popular posts from this blog

Pros and Cons of Outsourcing Your Accounting Services Pros of Outsourced Accounting Services Reduced Risk By outsourcing accounting services in Dubai, you can lower the risk of internal fraud compared to having an in-house accounting department.  Accounting companies in Dubai  prioritize data security and implement highly secure systems. You can trust that reputable accounting and auditing firms in the UAE will handle your accounting reports and financial data, such as revenue, loans, liabilities, and assets, with integrity. They won't engage in any negative activities that could harm their reputation. Ultimately, outsourcing accounting services in UAE reduces the risk for your company. Detailed Financial Reporting When you outsource your accounting and bookkeeping, you gain the valuable advantage of obtaining detailed financial insights. By accessing information like balance sheets, cash flow, and profit and loss statements, you can make informed decisions quickly. Bookkeepers use
Read more
Anti-Money Laundering (AML) Risk Indicators in UAE Directly or indirectly facilitating criminal activities such as money laundering through a business can lead to severe challenges in asset management. Moreover, non-compliance with anti-money laundering regulations can result in substantial legal costs and penalties if any money laundering activity involving the business organization is discovered. It is alarming that an enormous amount of money is laundered annually. To prevent this, it is crucial to remain vigilant regarding red flag indicators for AML/CFT and promptly identify any unusual signs. The earlier these indicators are recognized, the more effective the measures can be in avoiding or mitigating the damage caused. Red Flag Indicators for AML/CFT Having a thorough understanding of and taking appropriate action based on red flag indicators is crucial to detect any fraudulent or suspicious activities in financial transactions. In certain complex cases, it may be necessary to ga
Read more
Transfer Pricing under the UAE Federal Corporate Tax Law Transfer Pricing and Corporate Tax The  UAE Ministry of Finance (MoF)  introduced a new corporate tax (CT) regime through Federal Decree-Law No. 47 of 2022 on 9 December 2022. This law, also known as the Corporate Tax Law, brings changes to how corporations and businesses are taxed in the UAE. The new CT regime will come into effect for accounting periods starting from 1 June 2023, with a tax rate of 9%. Companies with a December year-end have 12 months to prepare and understand how this new tax will affect them. However, certain rules to prevent tax avoidance and transitional arrangements apply from the date the law is published in the Official Gazette. One important aspect of the Corporate Tax Law is the inclusion of transfer pricing (TP) rules. These rules apply to businesses in the UAE when they engage in transactions with related parties or connected persons. Arm’s Length Principle To calculate taxable income, transactions a
Read more