UAE Extends Corporate Tax Filing Deadline for Businesses with Shortened Tax Periods

The United Arab Emirates’ Federal Tax Authority (FTA) has granted an extension to the corporate tax filing and payment deadline for businesses with shortened initial tax periods. This extension aims to provide greater flexibility and reduce administrative burdens for newly established companies adjusting to the country’s corporate tax regime.

Businesses that were established on or after June 1, 2023, and have a financial year ending on or before February 29, 2024, will now have until December 31, 2024, to file their corporate tax returns and make any necessary payments. This extension recognizes that these businesses have a first corporate tax period shorter than the standard 12-month period.

“We are committed to supporting businesses and ensuring a smooth transition to the new corporate tax system,” said Khaled Al Bustani, director general of the FTA. “This extension provides businesses with additional time to fulfill their tax obligations without facing penalties.”

The UAE implemented a federal corporate tax with a standard rate of 9% beginning with the financial year starting on or after June 1, 2023. Businesses with taxable income exceeding Dh375,000 ($102,100) are subject to the tax, while profits below this threshold are taxed at a rate of 0%.

The Ministry of Finance has also clarified that business owners are only subject to corporate tax if their annual turnover surpasses Dh1 million, ensuring that only business-related income is taxed.

Key Takeaways:

• The FTA has extended the corporate tax filing deadline for businesses with shortened initial tax periods to December 31, 2024.
• This extension applies to businesses established on or after June 1, 2023, with a financial year ending on or before February 29, 2024.
• The move aims to ease the administrative burden on new businesses and ensure a smooth transition to the new tax regime.

The FTA’s decision to extend the deadline underscores its commitment to supporting businesses and fostering a favorable tax environment. This extension provides newly established companies with valuable time to adjust to the corporate tax regulations, ensuring compliance and minimizing the risk of penalties.