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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.
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.
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:
If a business's financial year ends on May 31st:
If a business's financial year ends on December 31st:
During the registration period, businesses are required to complete the necessary registration procedures as per the Corporate Tax Law. It is important for businesses to adhere to the specified timelines to ensure compliance with the registration requirements.
The tax return must include the following details:
1. Name, address, and tax registration number of the taxable person.
2. Date of tax submission.
3. Basis of accounting used in the financial statements.
4. Tax period to which the tax return applies.
5. Taxable income for the specified tax period.
6. Payment of tax loss relief claimed by the taxable person.
7. Payment of tax loss transferred, if applicable.
8. Tax credits available.
9. Final corporate tax payable at the end of the tax return.
Businesses are required to cooperate with the tax authorities by providing any requested information, documents, or records necessary for implementing the provisions of the decree law.
However, in cases where disclosing certain information poses a risk to national security or goes against public interest, the Minister has the authority to prescribe specific guidelines for filing tax returns with the tax authority.
In conclusion, it is crucial for businesses operating in the UAE to have a comprehensive understanding of the corporate tax law and its intricacies. This includes being aware of the tax period and submission deadline to ensure compliance with regulations and timely filing of tax returns, thereby avoiding penalties. Having a thorough understanding of these aspects helps businesses function smoothly.
With the introduction of corporate tax in UAE, many businesses may encounter challenges when it comes to tax submission. However, you can rely on the expertise of Reyson Badger, one of the leading corporate tax consultants in UAE, to assist you in meeting your tax obligations seamlessly.
As trusted corporate tax consultants in Dubai, we specialise in corporate tax submission and are well-versed in the intricacies of the new tax system. Our team of experts will provide you with comprehensive guidance and support to ensure a smooth and efficient tax filing process.
Whether you need assistance in understanding the requirements, organising your financial statements, or completing the necessary paperwork, we are here to help. To know more, get in touch with Reyson Badger.