Filing Tax Returns in the UAE

The United Arab Emirates (UAE) has long been associated with tax incentives and a favorable business environment. However, in recent years, the country’s tax system has undergone significant changes. Since 2018, Value Added Tax (VAT) has been introduced in the UAE, and starting from June 1, 2023, a Federal Corporate Tax has come into effect. These reforms are part of a broader strategy to diversify the economy and reduce dependence on oil revenues.

Below is an overview of the key features of Corporate Tax and VAT in the UAE, their structure, applicable rates, and implications for businesses and investors. Understanding the reporting rules for these taxes is essential for companies operating in the region, as it affects both financial planning and regulatory compliance.

Corporate Tax in the UAE was officially introduced by Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, effective from June 1, 2023.
According to this law, all taxpayers are required to file a Corporate Tax Return.

A Corporate Tax Return is an annual report where companies:

• Declare their taxable income (income minus allowable expenses);
• Apply reliefs and deductions;
• Calculate the amount of Corporate Tax payable.

• All UAE resident legal entities, including Free Zone companies (except Qualifying Free Zone Persons);
• Non-resident legal entities that are managed and controlled from the UAE;
• Foreign companies operating in the UAE through a permanent establishment;
• Individuals conducting business activities in the UAE (under a license).

Corporate Tax Returns are filed annually.
The return must be submitted within 9 months after the end of the company’s financial year.
Example: If the financial year ends on December 31, 2024, the return must be filed by September 30, 2025.

1. Accurate calculation of the tax base and proper documentation of all expenses is required. Companies in Free Zones must ensure they meet the criteria for the 0% rate.
2. For complex cases (e.g., transfer pricing, international transactions), it is advisable to consult a tax advisor.
3. Tax registration with the UAE Federal Tax Authority (FTA) is mandatory; a
4. Tax Registration Number (TRN) must be obtained.
5. Filing is done through the FTA’s EmaraTax online platform.
6. The return must include all income, expenses, tax incentives, and tax base. Financial statements supporting the tax return must be submitted. The FTA may request audited financials.
7. Special attention must be given to transfer pricing and transactions with related parties. Documentation is required (if applicable).

• 0% – for income up to AED 375,000 (approx. USD 102,000);
• 9% – for income above AED 375,000;
• 0% – for Qualifying Free Zone Persons (subject to meeting specific conditions).

• Individuals (unless conducting business);
• Dividends and capital gains (under certain conditions);
• Oil & gas companies (subject to a separate regime);
• Group tax regime is available if group eligibility criteria are met.

The FTA has introduced a penalty relief program for late registration under certain conditions:

• The company registers for Corporate Tax (if not already done);
• The return is filed within 7 months after the end of the first tax period or financial year.
If a penalty for late registration was already paid, it will be credited back after timely filing.

In the UAE, Value Added Tax (VAT) has been in place since January 1, 2018, under Federal Decree-Law No. 8 of 2017 on VAT. VAT is regulated by the Federal Tax Authority (FTA).

Companies registered for VAT are required to submit a VAT Return. The VAT Return is a quarterly report submitted by companies registered for VAT, showing the amount of:

• Output VAT (VAT charged on sales);
• Input VAT (VAT paid on purchases);
• The difference between the two, which determines the amount payable or refundable.

• All VAT-registered businesses (either voluntarily or mandatorily);
• Companies with annual turnover ≥ AED 375,000 must register and file VAT returns;
• Companies with turnover between AED 187,500–375,000 may register voluntarily.

The filing frequency depends on the size of the business:

• Large businesses (annual turnover > AED 150 million): monthly;
• Others: quarterly.
VAT Returns are due by the 28th day after the end of the tax period.
If the 28th is a weekend/public holiday, the deadline moves to the next working day.

• Returns are filed through the FTA’s EmaraTax portal.
• The company must be VAT registered with a valid TRN.
• Companies must maintain proper records: invoices, contracts, and supporting documents.
• All sales, purchases, imports, exports, and VAT-related transactions must be accurately reported.
• Businesses must keep a VAT ledger and retain all data for at least 5 years.

• Standard rate – 5%
• Zero-rated – 0%
• Exempt – 0%