Corporate Tax Return Filing in Dubai

Corporate tax is a direct tax applied to the net profits of businesses located within a jurisdiction. Under Federal Decree-Law No. 47 of 2022, the UAE officially implemented a business tax, that will take action for financial years starting on or after June 1, 2023. The standard tax rate is 9%, and 0% will apply to taxable income that does not exceed AED 375,000 or to qualifying free zone entities.

What is Corporate Tax Return filing in Dubai?

Corporate tax return filing is the process by which businesses will report their taxable income, any deductions, and taxes owed to the Federal Tax Authority, thereby complying with the UAE tax laws and ensuring firms' current financial records.

Purpose of Filing Corporate Tax Returns in Dubai

Dubai corporate tax reports must be filed for the following reasons:

• Compliance: Regulation of legal requirements in UAE tax laws.
• Transparency: Providing the FTA with correct information about income as well as deductions.
• Preventing Penalties: Ensuring fines are avoided by submitting on time and accurately.
• Contribution to the economy: Promoting a competitive tax system in Dubai while also supporting public services.

The FTA's EmaraTax portal is where businesses can file their returns, with deadlines every year and record keeping as necessary.

Eligibility Criteria for Corporate Tax Returns in Dubai

Entities Included

Corporate tax is imposed on various businesses and entities in Dubai under Federal Decree-Law No. 47 of 2022.

• Companies based in UAE: Companies based in the UAE can be either located on the mainland or in free zones.
• Foreign Companies: Foreign businesses that have a base in Dubai are subject to corporate tax obligations.
• Collaborations and Business Alliances: Unregistered business partnerships and joint ventures that generate taxable earnings are also  included

Exceptions

Some entities and organizations do not have to submit corporate tax returns as long as they meet certain requirements.

• Government-Owned Organizations: Normally, regulations do not apply to organizations that are owned or managed by the government.
• Non-Profit and Charity Groups: Nonprofit organizations that provide charitable or public services can be eligible for tax exemptions if they meet specific regulatory requirements.
• Qualifying Free Zone Entities: Businesses in specified free zones can be exempt if their earnings meet the legal requirements.

How to Submit a Dubai Corporate Tax Return

The Corporate Tax Law mandates that companies operating in the United Arab Emirates file a corporation tax return. Here is a brief overview to assist you in meeting the necessary criteria:

Register with the FTA

• Create an EmaraTax account on the EmaraTax portal.
• Get your Tax Registration Number (TRN) to start filing.

Keep detailed and precise documentation.

• Create financial statements following International Financial Reporting Standards (IFRS).
• Retain all paperwork that backs up your deductions, exemptions, and calculations for taxable income.

Prepare and File the Return

• Determine your taxable income and use the correct tax rate: 0% for eligible income or 9% for remaining taxable income.
• Turn in your return within 9 months following the conclusion of your financial year.

Tax Rates and Special Provisions for Corporate Tax Return Filing in Dubai

• Standard Rate of 9%:

This rate applies to taxable income over AED 375,000. Companies that make profits exceeding this limit will be liable to pay the regular corporate tax in the UAE.

• 0% Tax Rate:

The tax rate is zero for any taxable income up to AED 375,000, primarily targeted at supporting startups and small businesses. Besides that, free zone entities may obtain a 0% tax rate if the specific entities meet the stated regulatory standards of the FTA.

These rates demonstrate the UAE's dedication to establishing a competitive and encouraging business environment while following international tax regulations.

Avoid Common Compliance Errors

• Maintain thorough and precise documentation by IFRS guidelines.
• To prevent penalties, make sure to submit returns within the 9-month time limit.
• Use the appropriate tax rates: 0% for eligible earnings, and 9% for taxable income exceeding AED 375,000.
• Verify qualifications for potential exemptions and retain all necessary documentation.
• Make careful you use the correct TRN for submissions when you enroll with the Federal Tax Authority (FTA).

Where to Find Official Information

• Federal Tax Authority: The FTA offers the most recent updates, instructions, and online services for corporate tax submission. It serves as the main source for authorized tax rates, exemptions, and registration procedures.
• Ministry of Finance: The Ministry of Finance explains corporate tax regulations, their enforcement, and any updates to the rules. Understanding how the tax law corresponds with national economic policies is crucial.

Choose Reyson Badger

Dubai based corporate tax return filing service is facilitated by Reyson Badger for a hassle-free approach. Whether a local or international company, registration with the Federal Tax Authority and various tax rates can be a confusing deal. With Reyson's professional assistance, simplified filing, accurate records, no fines, and compliance with the UAE's firm grasp of corporate tax laws are guaranteed.