Year-End Financial Readiness for UAE Corporate Tax Return Filing – What Businesses Need to Know

With the introduction of Corporate Tax in the UAE effective from 1st June 2023, businesses operating on a calendar year (January to December) must now gear up for their first tax return filing by September 2025. As the financial year comes to a close, it's crucial to understand the tax implications, record-keeping requirements, and reporting obligations to stay compliant and avoid penalties.

In this blog, we’ll walk you through the key financial readiness steps every business should take while preparing for UAE Corporate Tax Return Filing.

1. Understand Your Tax Period and Filing Deadline

For most businesses with a January–December financial year, the first tax period is 1 Jan 2024 – 31 Dec 2024, and the corporate tax return filing deadline is 30 September 2025. However, if your business was incorporated during 2023 and exceeds 18 months of operation, the filing date could be earlier. Always check your tax registration certificate and correspondence from the Federal Tax Authority (FTA).

2. Choose Your Accounting Basis – Accrual or Cash

Accrual Basis is mandatory if your annual revenue exceeds AED 3 million.
Cash Basis can be adopted for businesses below this threshold.
Ensure your bookkeeping and accounting software align with the basis you choose and comply with IFRS or IFRS for SMEs (for revenues below AED 50 million).

3. Audit Requirements

If your annual revenue exceeds AED 50 million, or if you are claiming Qualifying Free Zone Person status, your financial statements must be audited and submitted with the corporate tax return.

4. Document Retention – 7+1 Rule

Maintain proper accounting records for 8 years (1 current year + 7 future years). Records include:
- Invoices
- Contracts
- Financial statements
- Fixed asset registers
- Payroll data

5. Be Aware of Tax Elections

Some tax elections must be made in the first return and are irrevocable:
- Realisation vs. Unrealised Basis
- Small Business Relief
- Qualifying Group Transfers & Business Restructuring Relief

6. Adjustments to Accounting Income

Your accounting profit must be adjusted to arrive at taxable income. Common adjustments include:
- Non-deductible expenses
- Unrealized gains/losses on capital assets
- Interest capping (30% EBITDA or AED 12 million, whichever is higher)
- Disallowed expenses related to exempt income

7. Transfer Pricing and Related Party Transactions

If your business deals with related parties or connected persons, you must:
- Conduct arm’s length analysis
- Maintain Transfer Pricing documentation
- Disclose transactions in the tax return if they exceed AED 4 million per category or AED 50 million in aggregate
Also, payments to connected persons exceeding AED 500,000 must be disclosed.

8. Capital Gains and Transition Rules

For assets acquired before 1 January 2024, any gain accrued up to that date is exempt under transition rules. Ensure you:
- Obtain a market valuation as of 1 January 2024
- Use either valuation or time apportionment method to calculate taxable gain on disposal

9. Foreign Income and Tax Credits

If your UAE entity earns foreign-source income and pays tax overseas, you may be eligible to claim foreign tax credits. Maintain:
- Tax payment proofs
- Tax residency certificates
- Supporting documentation

10. Corporate Tax Grouping and Consolidation

If you’re forming a Tax Group, ensure:
- 95% direct or indirect common ownership
- Same financial year
- All entities are resident juridical persons
- Exclude Qualifying Free Zone Persons from the group
Prepare consolidated financials along with individual entity accounts.

Final Thoughts

The first year of Corporate Tax filing in the UAE is a milestone. Ensuring your financials are well-prepared, tax elections assessed, and documentation maintained can save your business from penalties, compliance risks, and missed tax reliefs.

At CorporateTaxCalculator.ae, we simplify UAE Corporate Tax for you. Use our free Corporate Tax Calculator to estimate your liability, and reach out to our experts for assistance with:
✅ Year-End Tax Planning
✅ Financial Statement Review
✅ Tax Return Filing
✅ Transfer Pricing Documentation
Stay compliant. Stay ahead. Let us help you file it right the first time.

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