United Arab Emirates

The FTA will be responsible for the administration, collection, and enforcement of UAE CT, while the MoF will remain the ‘competent authority’ in terms of international tax agreements and the exchange of information for tax purposes.

Taxable period

A taxable person’s tax period is the financial year (the Gregorian calendar year or the 12-month period for which financial statements are prepared) or part thereof for which a UAE CT return is required to be filed.

A taxable person can make an application to the FTA to change the start and end date of its tax period, or use a different tax period, subject to the following conditions:

• The change is for liquidation purposes.
• The change is for aligning the taxable person’s financial year either for tax grouping, financial reporting, or domestic and foreign tax relief purposes.
• There is valid commercial, economic, or legal reason to change the tax period.
• The UAE resident person has not yet filed the tax return with the FTA for which they are requesting a change in tax period.
• The application is made no later than six months after the end of the original tax period (i.e. three months before the original tax return is due).

It is important to note that a taxable UAE resident person may only change the relevant tax period by means of either extending the current tax period to be a maximum of 18 months or shortening the following tax period to be a minimum of 6 months and a maximum 12 months.

CT registration, returns, and payments

Every taxable person will be required to electronically register for UAE CT with the FTA within a prescribed timeline and obtain a Tax Registration Number. The registration will need to be undertaken even if the taxable person has already been registered for VAT purposes.

In order to keep the administrative burden on taxpayers to a minimum, the CT Law requires a taxable person to file only one tax return for each tax period.

The filing will need to be done electronically no later than nine months from the end of the relevant tax period, and the CT registration would need to be undertaken before this date. Any UAE CT payable will also need to be settled within these timelines.

Please see examples in the table below: 

Tax assessment

A taxable person may be subject to a UAE CT assessment in accordance with the Tax Procedures Law. In case a non-compliance to the CT Law is identified during the assessment, penalties and fines determined per the Tax Procedures Law could be imposed. 

Financial statements

A taxable person may be required to submit the financial statements used to determine the taxable income for a tax period in the form and manner and within the timeline prescribed by the FTA.

Taxable persons shall prepare financial statements by applying International Financial Reporting Standards (IFRS). Such financial statements shall be audited if the taxable person earns revenue exceeding the threshold of AED 50 million during a relevant tax period or if the taxable person is regarded as a QFZP.

In case the revenue does not exceed AED 3 million or through an application in exceptional circumstances to the FTA, the financial statements may be prepared on a cash basis (as opposed to accrual).

Record keeping

A taxable person must maintain all relevant records and documents for the following periods:

• The retention period for real estate records is seven years from the end of the calendar year in which such record or document was created.
• The general document retention period of five years will be extended by one year starting from the date of submission of a voluntary disclosure in the fifth year from the end of the relevant tax period.
• Additional four years in case of ongoing tax audit, tax dispute, or a notification by FTA on a pending tax audit.
• Legal representatives are required to continue to retain the required books and records of the person they were representing for a period of one year from the date on which such legal representation ends.

Clarifications

A person can make an application to the FTA for a clarification regarding any part of the UAE CT Law or for concluding an APA for a transaction or arrangement.

General anti-abuse rule (GAAR)

In line with international best practice, the UAE CT Law includes a GAAR, which applies to transactions giving rise to a tax advantage where no valid commercial reason exists and where the tax advantage was the main or one of the main purposes of the transaction.

Where the GAAR applies, the FTA can make a determination that one or more specified CT advantages are to be counteracted or adjusted. If such a determination is made, the FTA must issue an assessment giving effect to the determination and can make compensating adjustments to the UAE CT liability of any other person affected by the determination.

In any proceeding concerning the application of the GAAR, the FTA must demonstrate that the determination made is just and reasonable.