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Importance of Corporate Tax Declaration and Compliance of Tax Return

A corporate tax declaration under UAE corporate tax law serves as a formal statement that obliges taxpayers to report their corporate tax liability and subsequently settle the due amount with the Federal Tax Authority (FTA). The essential components encompassed within this declaration consist of the taxpayer's identity details, including name and address, alongside the crucial tax identification number (TIN). Additionally, it should indicate the specific tax period to which the declaration pertains, presenting the taxable income for that duration. The applicable corporate tax rate, tax payable, any tax credits or relief claimed, as well as withheld or paid taxes, must be meticulously delineated. Calculating the net corporate tax, whether due or refundable, is a fundamental step in this process. To adhere to the regulatory framework, the declaration must be electronically submitted through the FTA's website within four months subsequent to the closure of the respective tax period. Furthermore, the submission necessitates the attachment of the audited financial statements and any additional supporting documentation stipulated by the FTA.

Relevant Provisions of UAE Corporate Tax Law 

Tax regulations are significant for any business operating in a dynamic economic environment like the UAE. One such important component is the submission of Corporate Tax Returns, as outlined in Article 53 of the Corporate Tax framework. 

Requirements for Corporate Tax Return Submission

These submissions, alongside the accompanying disclosures, play an indispensable role in upholding the effective administration and enforcement of Corporate Tax regulations. 

I. Submission Deadlines

Article 53 mandates a fundamental obligation on Taxable Persons. The submission of Tax Return within nine months is mandatory for each Tax Period from the conclusion of the related Tax Period. For clarity, if a Tax Period concludes on December 31 in Year One, the Tax Return must be lodged by September 30 in Year Two. This clause further grants the Authority the flexibility to establish an alternative filing deadline, taking into account the specific circumstances of a given entity.

II. Essential Information Criteria

Prerequisites for Data Inclusion

Clause 2 outlines the specific, mandatory information that Taxable Persons must provide to the Authority as an integral part of their Tax Return. This encompassing information includes:

  • The specific Tax Period to which the Tax Return pertains, as outlined in Article 57.
  • Comprehensive details such as the name, address, and Tax Registration Number, a   unique identifier issued by the Authority to individuals or entities registered for Corporate Tax within the United Arab Emirates, as per Article 51.
  • The exact date of Tax Return submission.
  • The chosen accounting basis employed in preparing the financial statements, as articulated in Article 20.
  • The Taxable Income, signifying the income subject to Corporate Tax in accordance with the principles in Article 20 for the respective Tax Period.
  • Any claims for Tax Loss relief, as stipulated in Article 37(1).
  • The extent of Tax Loss transfers into or out of other group companies, as provided for in Article 38.
  • Claims for Withholding Tax Credit and Foreign Tax Credit, where relevant, in line with the terms set forth in Articles 46 and 47.
  • The precise amount of Corporate Tax Payable for the relevant Tax Period.

III. Compliance Obligations

It is the obligation of Taxable Persons to provide the Taxation Authority with any records, information, or documents required for the effective enforcement of UAE Corporate Tax. This requirement necessitates the inclusion of such information, documents, or records within the Tax Return or their provision upon request by the Authority.

IV. Safeguarding National Security and Public Interest

When a Taxable Person's standard information disclosure might compromise national security or contradict the public interest, Clause 4 empowers the Minister to establish alternative information disclosure mechanisms for such entities. This provision allows the Minister to define alternative formats or methods, or both, for the submission of Tax Returns or other essential information to the Authority, ensuring the delicate balance between transparency and security.

V. Exempt Persons: 

Under Clause 5, individuals or entities exempt from Corporate Tax by application, as per Article 4(1)(e) to (i) for instance (e) encompassing Qualifying Public Benefit Entities, (f) Qualifying Investment Funds, (g) Pension or social security funds, (h) Juridical entities incorporated in the UAE that are under complete ownership and oversight of designated Exempt Persons, and (i) Any other individual or entity are required to file a declaration if Authority require so. This declaration serves as a middle ground, offering the Authority the information necessary to verify that these Exempt Persons continue to meet the conditions for exemption from Corporate Tax while alleviating their compliance burden.

VI. Unincorporated Partnerships and Simplifying Disclosure

  • Unincorporated Partnerships that choose not to pursue autonomous Taxable Person status according to Article 16(8) are subject to Clause 6, which authorizes the Authority to call upon the authorized partner to furnish a declaration on behalf of all partners encompassed within the Unincorporated Partnership. This measure efficiently balances the need for information about the Unincorporated Partnership with the compliance burden.

VII. Parent Company Role in Tax Groups:

As members of a Tax Group are viewed as one single Taxable Person, Clause 7 clarifies that the Parent Company of a Tax Group bears the responsibility for submitting the Tax Return to the Authority on behalf of the entire Tax Group. This aligns with the Parent Company's role as the representative of the Tax Group, as articulated in Article 40. By understanding its intricacies, businesses can ensure they meet their obligations while streamlining the submission of Corporate Tax Returns. These provisions not only help maintain transparency but also safeguard national interests and balance the compliance burden for different entities. 

Seek the expert services of top Tax Consultants in UAE

To effectively determine taxability in compliance with the corporate tax law, businesses are advised to avail the services of top Tax Consultants in UAE. Thus, contact us and we shall be glad to assist you.

Read More: Conditions for Small Business Relief under Corporate Tax in UAE

Ervee is a CPA with international experience in Tax and Accounting. He has over 12 years of experience in accounting and bookkeeping and over a year in VAT implementation, registration, and accounting in UAE. He regularly drives out inefficiencies in company operations and loves the challenge of helping clients find additional ways for an easier and improved compliance and verification of transactions.