Corporate Tax Return Due 31st December 2024: Compliance and Key Updates

Corporate Tax Return Due 31st December 2024: Compliance and Key Updates

The Federal Tax Authority (FTA) in the UAE has recently issued Public Clarification CTP004, announcing the postponement of the Corporate Tax (CT) return deadline for certain entities. For businesses incorporated in June 2023, the first CT return was initially due by 30th September 2024. However, this deadline has been extended to 31st December 2024, as per the new FTA decision.

What’s New for the First Corporate Tax Return?

Previously, tax registration certificates indicated that CT returns for entities incorporated in 2023 were due by September 2024. However, FTA Decision No. 7 of 2024 clarifies that entities with tax periods ending on or before 29th February 2024 are now required to submit their CT return and settle their Corporate Tax Payable by 31st December 2024. This includes entities incorporated on or after 1st June 2023, with short tax periods.

Who Does This Impact?

This new deadline impacts entities incorporated from 1st June 2023, including businesses registered under Free Zones, whose first tax period ends on or before 29th February 2024. Free Zone entities that qualify for Free Zone Relief must still submit audited financial statements by the revised deadline.
Steps to Compliance for Corporate Tax Return:

1. Check Your Tax Registration Certificate:
   • Verify that your certificate reflects the correct tax period and the new submission deadline.
2. Submit the CT Return via EmaraTax:
3. Ensure submission before the 31st December 2024 deadline to avoid penalties.
4. Maintain audited financial statements and proper records for Qualifying Free Zone Person (QFZP) status.
5. Contact the FTA to expedite your registration application to meet the new deadline.
6. Complete your financials for the first tax period and ensure all necessary attachments and documents are prepared.
7. Free Zone Entities:
8. Tax Registration Still Under Review?
9. Finalize Your Books and Records:

Corporate Tax Return: Section Overview

Here’s a breakdown of the sections in the UAE Corporate Tax Return:

• Section 1: Basic taxpayer details (name, TRN, tax year).
• Section 2: Financial statement inputs for calculating taxable income (revenues, cost of sales, other income).
• Section 3: Adjustments to income (exempt income, permanent establishment adjustments).
• Section 4 (FZ and Non-FZ): Tax calculations specific to Free Zone and Non-Free Zone entities.
• Section 5: Deductions (interest expenses, losses, capital allowances).
• Section 6: Non-deductible expenditures (entertainment, pension contributions, charitable donations).
• Section 7: Tax liabilities, credits, and final tax payable or refund.

Additional Key Points for CT Return Compliance

• Validation of Business Information: Ensure all business details in the CT return are accurate.
• External Auditors’ Opinion: Submit auditors' opinion, especially for Free Zone entities seeking exemptions.
• Disclosure of Connected Persons: Comply with transfer pricing rules by disclosing related parties.
• Tax Methodology: Choose between accrual or cash basis for tax purposes.
• Transitional Rules: Ensure compliance with transitional rules under the new regime.
• MNE Group Compliance: If part of an MNE group, additional compliance requirements apply.
• Record-Keeping for Partnerships: Maintain detailed records due to specific tax treatments.
• Foreign Tax Credits: Accurately calculate foreign tax credits by jurisdiction.
• Backup Documentation: Prepare and upload necessary financial statements and supporting documents with the CT return.

Implications of Non-Compliance

Failure to submit the CT return by 31st December 2024 could result in penalties starting from 1st January 2025. If challenges arise in meeting the deadline, businesses should request an extension from the FTA through the EmaraTax portal.
By staying updated on the evolving Corporate Tax regulations in the UAE, businesses can avoid penalties and ensure compliance. If you need assistance with filing your CT return or understanding the implications of Public Clarifications CTP003 and CTP004, our expert team is here to help.