Early Corporate Tax Return filing could be mandated for registration of taxpayers for Fiscal Year ending 31 March 2024 and commencing on June 1, 2023. It could be the case for other periods too. Guidance is now available on tax periods together with deadlines, timelines with 20 schedules, transfer pricing commentaries, and the required filings to EmaraTax mandated by the Federal Tax Authority. Tax processes will now be a common part of the financial team’s work.
Awami handles the full corporate tax filing process including transfer pricing and timely EmaraTax mapping so that returns processed are accurate in all regards. For more details on Corporate Tax Return UAE, please call Awami at +971 52 147 1003
Guided schedules: 20 schedules are there in the return, but only some schedules are shown to the filer. EmaraTax accurately captures and populates the relevant fields, but businesses must ensure that the registration data is cast correctly to extract accurate fields.
Multi-period elections: In claimed periods of the return, elections that are opted for such as opting-out of the free zone regime with 0 percent tax, realization basis, and transitional rules are preserved from one period to the next automatically.
A set of financial statements has to be included with the Corporate Tax Return as a compulsory element in the filing.
Key Deadline Marker: who was First in Scope
First due date reference:31 December 2024 is for taxpayers with a first financial year starting on or after 1 June 2023, and closing on, or before, 31 March 2024.
Practical implication: Businesses with year ends later in the year need to synchronize their calendars, business processes, and audit preparation to be able to in EmaraTax append financial statements and finalize their schedules in a timely manner.
Transfer pricing:Thresholds and Disclosures
Reporting threshold:Transfer pricing reporting within the return is mandatory when the value of the transactions with associated parties exceeds AED 40 million in market value or as per financial statements.
Category threshold:After crossing the AED 40 million threshold, only aggregate transactions with associated parties per category of over AED 4 million (For example, goods, services, IP, interest, etc.) need to be reported.
Connected persons:The schedule of transactions with connected persons is completed only when the total benefits per person exceed a threshold of 500,000, with the restriction of dividends paid to related parties not counting in the threshold.
Adjustments:Transfer pricing adjustments that lower the taxable income due to the application of pricing set within the FTA, require approval prior to making that adjustment into the Corporate Tax Return.
Free zone persons: substance and reporting
Elections carry-over: If a free zone person elects out of the 0% rate, that choice carries into subsequent returns automatically, affecting tax computations and schedule prompts.
Do the employees averaging: Free zone Persons must report on the average number of full time employees which is averaging the FTE at the beginning and the end of the year.”
Error correction protocol
De minimis corrections: Errors in a prior return that reduce tax by AED 10,000 or less can be corrected in the current period return through an adjustment, thus, minor errors can be simplified to the extent that there is no need for a separate voluntary disclosure.
Material differences: More complex adjustments should be examined and corrective processes as set by the FTA and the proper documentation within EmaraTax are used.
What Must be Attached and Prepared
Mandatory Financial Statements: Recording Financial Statements and Corporate Tax must be done at the same time, which means audit or management accounts should be put in order prior to filing.”
Supporting Schedules: Make sure the source data for the thresholds on the related parties, connected persons, and the sums at the category level is reconciled to the financial statements to satisfy disclosure thresholds and logic.
Free zone Focus: Practical Notes
Check the status of the 0% election: Determine if the entity has elected not to fall under the 0% regime and check that the tax position that results aligns with governance and business expectations.
Capture both closes to get Closing FTE: Establish a system to monitor the closing FTE so that the average is easily accessible for the return.
Synchronize compliance related documents: Ensure that the license, the evidence of substance, and the financial statements are aligned with the disclosures to pass the review.
Common pitfalls to avoid
How Awami can assist with corporate tax submissions
Readiness for EmaraTax: Confirm the correctness of registered addresses, elections, and schedules so all relevant fields are flagged for the Corporate Tax Return UAE.
Support for EmaraTax Section 7: Establish transaction documents, monitor and manage threshold tests, manage classification, and seek FTA pre-approval for all downward TP.
Attach financial statements: Align the close and audit schedules to ensure that all documents that require the EmaraTax v2 are done before the audit.
Improve audit processes: Create internal processes for checking connected persons, related-party classification, and protocols for mistakes above the AED 10,000 cap.
Continuing compliance: Develop policy for the length of time for governance for elections and disclosures to ensure there are no gaps in returns from one period to another.
Conclusion
Corporate Tax Returns involve intensive syncing of data within EmaraTax such as elections, financial statements, and breach levels of transfer pricing. Fulfilling the requirements for every schedule, along with the additional (and often tech incorporated) attachments is complex and needs a robust workflow to avoid tabulation and penalty slips done in a rush. Fulfilling requirements such as TP preapprovals for downward adjustments and connected-person limits is intricate, and failure to manage them will surely result in penalties.
Clients of Awami filing corporate tax returns in the UAE will receive unmatched workflow EmaraTax integration for seamless schedule transfer from tax returns, pricing controls, and additional statement provisions. This simplifies the filing process, allowing finance teams to take the burden off and submit the documents punctually. Awami indeed will assist you in complying with the UAE corporate tax return and in executing pendulous compliance tactic plans. Don’t forget you can contact Awami directly, through the number +971 52 147 1003
FAQS
How many emara tax schedules can a continent take?
The document consists of 20 schedules, and EmaraTax directs filers only to applicable ones based on registration and profile data, making accuracy at registration crucial.
How many are the transfer pricing boundaries in the return?
TP reporting applies when total related-party transactions exceed AED 40 million, and then only per-category aggregates above AED 4 million require disclosure.
In accounts in the return, do related party dividends count towards the limits?
Dividends to related parties are excluded when computing thresholds for certain disclosures and connected-person calculations in the return.
Do downward transfer pricing adjustments need approval?
Yes, all downward TP adjustments that lower taxable income need to have FTA approval before being made in the return.
Are financial statements mandatory with the Corporate Tax Return?
Yes, financial records must be added to the return. Therefore, the statements have to be finalized prior to submitting.
What if there was a small mistake in the previous return?
Where the mistake involves tax that is AED 10,000 or less, it is considered a minor error and can be addressed through an adjustment in the current period return.
