Corporate Tax

Compliance and Dispute Resolution

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Compliance and Dispute Resolution

[Based on the Public Consultation Document released by the Ministry of Finance, UAE on 28 April 2022.]

Administration

Registration and Deregistration
Registration
  • A business subject to Corporate Tax to register with FTA
  • Obtain the Tax Registration Number, within the prescribed period
  • Automatic registration by FTA, if suo-moto is not registered
Deregistration
  • At the time of cessation or liquidation
  • Apply for deregistration within 3 months from the date of cessation
  • Will be deregistered only post completion of return filing and payment of due taxes.

Filing:

Corporate Tax Return

Filing within 9 months from the end of the relevant tax period

  • One Tax Return and other related supporting schedules for each tax period
  • No provisional Corporate Tax Return or payment of advance tax
Additional documents

Mainland: Audited financials - whether the financial statements are to be audited or not shall be determined by the applicable company laws. As per the Commercial Company Law (Federal Law no (2) of 2015), the financials are to be audited by an accredited audit firm.

Free Zone: Audit is mandatory for Free Zone Persons to benefit from a 0% tax regime

Other records that explain the information contained in the return would also be required to be filed.

Exempted persons will also require to maintain records to ascertain their exempt status

Payment of Corporate tax

Payment to settle the tax liability is to be made within 9 months of the end of the relevant tax period.

Where a refund is due, apply to FTA for a refund.

Assessment::

The corporate Tax regime is based on the self-assessment principle.

A review of the Corporate Tax Return filed will be undertaken by the FTA within the time frame as prescribed by the law.

Taxpayers can challenge an amended assessment via the process and procedures outlined in the Tax Procedures Law.

Advance Clarification / determination of taxes

The corporate tax regime gives the option to taxpayers to avail clarification from FTA on a particular contract to determine taxability.

Clarification would be binding on FTA when the facts and circumstances are similar.

Our comments:

The new Corporate Tax regime insists on maintaining books of accounts and their audit as well, which was not stringently followed by many businesses in the UAE.

In order to support start-ups and small businesses in the UAE, and to manage the compliance burden on these taxpayers, the UAE Corporate Tax regime intends to provide relief for small businesses in the form of simplified financial and tax reporting obligations. This is another good move to promote start-ups and SMEs. The eligibility for a business to be considered as start-ups and small businesses is awaited.

An option for businesses to clarify their tax position in case of doubt is a welcome move that will provide insight to authorities and businesses on complicated matters. It would help to reduce litigation as the tax position would be taken before filing the tax return.

It has been indicated that Tax Procedures Law shall be released which will introduce the time limit for assessment and reassessment as well as conditions under which an appeal can be filed to challenge the assessment.

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