How to File Corporate Tax in Abu Dhabi?

Step 1: Create a Corporate Tax Account

Make an account on the EmaraTax portal first. The UAE Central Bank and UAE PASS systems are linked to this platform. The first step in handling any corporation’s tax-related duties is registration.

Step 2 : Sign up with the FTA

Ask the FTA for a Tax Registration Number (TRN). Make sure your company has a valid trade license.

Step 3: Get Accounting Records Ready

Financial statements are the foundation of any kind of taxes as well as for your Corporate Tax Return. These consist of:

• Income Statement: You must keep track of your company’s earnings and expenses before determining the net profit or loss for the applicable tax period.
• Balance Sheet: A balance sheet is a summarized record of the company’s financial position, such as liabilities, assets, and equity.
• Cash Flow Statement: It is needed at times to demonstrate your inflow and outflow of cash.

The financial statements need to be prepared as per International Financial Reporting Standards (IFRS).

Step 4: Calculate Taxable Income

Taxable income is determined by deducting allowable business expenses, like salaries, rent, and depreciation, from total revenue. Exemptions, such as dividends and foreign branch funds, are also considered.

The company tax rate is 9% if the net taxable income is more than AED 375,000. If a small business’s revenue falls below the specified threshold, they may be eligible for tax reduction.

Step 5: Complete the Corporate Tax Return Form

Go to the FTA site, complete the form, enter all the information requested, and attach the appropriate files. Carefully examine the application to make sure that all information is accurate. Mark the checkbox to verify the correctness of the data. To formally submit your application for Corporate Tax Registration, click ‘Submit’.

When is the Corporate Tax Return Filing Deadline in Abu Dhabi?

In the United Arab Emirates, companies have nine months from the end of the applicable tax period to file their tax returns and pay the Federal Tax Authority (FTA) the corporate tax. For instance, a business whose first tax period starts on June 1, 2023, will have until February 28, 2025, whereas a business whose first tax period starts on January 1, 2024, will have until September 30, 2025.

This move depends on the UAE’s dedication to guaranteeing the smooth implementation of the Corporate Tax policy. The benefits of submitting corporate tax returns include effective cost and correct control of time, a single tax return for a group, and the ability to combine the total amount of group tax paid, in which some businesses make a taxable revenue while others may have a tax loss.

Penalties for Late Filing

Late Corporate Tax Registration Fine

Failure to register for company tax within the Federal Tax Authority’s (FTA) specified timeframe will result in a penalty of AED 10,000. This fine applies to enterprises that fail to submit their registration applications on time, and it is meant to ensure that all companies are correctly registered under the corporate tax system.

Late Corporate Tax Return Submission Fine

A business will be subject to the following penalties if it fails to file its corporation tax return on time.

AED 500 per month (or part thereof) for the first 12 months.

AED 1,000 a month (or a portion of it) starting in the thirteenth month. The penalty starts the day after the deadline and lasts until the return is turned in.

Failure to Maintain Proper Records

Companies must maintain accurate and up-to-date records to comply with the corporation tax law. Failing to do so will result in penalties:

• AED 10,000 for each violation.
• A fine of AED 20,000 will be imposed for repeated offences committed within 24 months of the prior violation.

Common Mistakes to Avoid When Filing Corporate Taxes in Abu Dhabi

Calculation Errors

Mistakes in determining tax liabilities might lead to major consequences.  Ensure that all figures are double-checked and consider adopting accounting software to limit the possibility of human error.  Consult a certified accountant for assistance if needed.

Lack of Tax Planning

Many companies don’t consider their tax responsibilities until tax season, which results in hasty and inaccurate files.  Tax planning should be done all year long to find ways to reduce taxes and make the filing process go more smoothly.

Refusing Professional Help

Attempting to navigate the complexities of tax filing without professional assistance might result in heavy mistakes.  Consider employing a tax expert or accountant who is familiar with UAE tax legislation to help you navigate the procedure and ensure compliance.

Stay Informed about Tax Regulations

Since tax laws are always changing and could lead to errors, businesses need to stay informed about the latest developments.

Lack of Understanding of Tax Incentives

Businesses may qualify for tax benefits or breaks, but they may lose out on these opportunities because they don’t comprehend the tax laws, which would lead to unnecessary tax payments.

Lack of conformity with the transfer pricing regulations

Businesses that deal with related parties will have to follow transfer pricing guidelines.  The tax authority may make modifications that result in penalties if the transactions are not accurately documented.

Tax Registration and Deadlines

For UAE businesses to avoid fines, they must register for corporate tax and submit their returns on time.  Prompt submissions are required by the Federal Tax Authority (FTA).

Keep track of due dates and schedule preparation time.  Penalties or legal action result from late filings.  For smooth compliance, collaborate with Accountants or an FTA-approved organization.

Failure to Register for Corporate Tax or Obtain a Tax Registration Number (TRN)

Last but not least, businesses and organizations need to get a Tax Registration Number (TRN) and register for corporate tax.  Since operating without registration is a violation of tax regulations, failure to do so would result in severe penalties.

Final thoughts

Corporate tax return filing in the UAE represents a significant shift in the country’s corporate regulations.  Success with this new tax system is dependent on paying close attention to detail, keeping accurate records, and following compliance deadlines.

Businesses must abide by all regulations to prevent fines and preserve their good standing with the Federal Tax Authority (FTA), regardless of whether they manage their taxes on their own or with professional assistance.

By remaining informed and making plans in advance, businesses can minimize the risk of heavy penalties and guarantee that their tax returns are filed on time.