UAE Corporate Tax has arrived. It applies to financial years starting on or after 1 June 2023, so businesses with a June year-start are now in their first tax period. For most others, it begins with their next financial year.
When does your first tax period start?
Your first tax period is your first financial year starting on or after 1 June 2023. For example:
| Financial year | First tax period |
|---|---|
| 1 June to 31 May | 1 June 2023 to 31 May 2024 |
| 1 January to 31 December | 1 January to 31 December 2024 |
| 1 April to 31 March | 1 April 2024 to 31 March 2025 |
The Corporate Tax return and payment are due within nine months of the end of each tax period.
What to have in place
1. Registration. All taxable persons, including free zone entities, will need to register with the Federal Tax Authority. Registration is being opened in stages, and deadlines will be confirmed by the FTA.
2. Reliable accounts. Taxable income is calculated from your financial statements, prepared under accounting standards. Monthly bookkeeping, proper year-end closing and clear records are now essential, not optional.
3. Record-keeping. Records supporting your tax position must be kept for seven years after the end of the tax period.
4. Related party transactions. Transactions with group companies, shareholders and other related parties must be on arm’s length terms, and documented.
5. Elections and reliefs. Decide early whether Small Business Relief, tax grouping or free zone status applies, as these affect how you record and report.
The cost of waiting
The first return may feel a long way off, but the figures in it are being created now. A business that keeps clean records from the start of its first tax period will find its first return straightforward. One that tries to reconstruct a year of transactions afterwards will not.
If you would like help preparing for Corporate Tax, from registration to your first return, please get in touch.
This article is general information based on the rules as we understand them at the date of publication. It is not advice on your circumstances. Laws and practice change, so please speak to us before acting on it.
