UAE Corporation Tax: An Overview of Administration Considerations
The United Arab Emirates (UAE) has introduced a new tax, the Corporation Tax , which applies to taxable persons operating in the UAE. In this blog post, we will discuss the various administration considerations for UAE Corporation Tax, including registration/deregistration, tax return, payments, financial statements, Transfer Pricing documentation, record keeping, tax period, clarifications, advanced pricing agreements, tax assessments, and other important points to keep in mind.
Corporation Tax Registration/Deregistration and Tax Return and Payments:
- Every taxable person must register electronically for UAE Corporation Tax with the Authority within a prescribed timeline and obtain a Tax Registration Number.
- Only one tax return needs to be filed for each Tax Period, which must be done electronically no later than nine months from the end of the relevant Tax Period.
- Any UAE Corporation Tax payable must also be settled within the prescribed timeline.
Financial Statements:
- Taxable persons may be required to submit financial statements used to determine the taxable income for a Tax Period.
- The Minister may issue a decision setting out which categories of taxable persons are required to prepare and maintain audited or certified financial statements.
Transfer Pricing Documentation:
- The Authority may require a disclosure form containing information regarding transactions and arrangements with related parties and connected persons.
- A master file and local file must be maintained and submitted within 30 days upon request of the Authority, in case conditions prescribed by the Minister are met.
- The Authority may also require any taxable person to submit supporting information for the arm’s length nature of transactions and arrangements with related parties and connected persons.
- Transfer Pricing documentation requirements will not be applicable to a taxable person eligible for Small Business Relief.
Record Keeping:
- Taxable persons must maintain all relevant records and documents for seven years following the end of the Tax Period.
Tax Period:
- A taxable person’s Tax Period is the financial year or part thereof for which a UAE Corporation Tax return is required to be filed.
- A taxable person can apply to the Authority to change the start and end date of its Tax Period or use a different Tax Period, subject to conditions set by the Authority.
Clarifications and Advanced Pricing Agreements:
- A person can apply to the Authority for clarification or to conclude an advance pricing agreement for a transaction or arrangement.
- The form and manner of the application will be confirmed by the Authority.
Tax Assessment:
- Taxable persons may be subject to a UAE Corporation Tax assessment, and in case of non-compliance, penalties and fines could be imposed as per the Tax Procedures Law.
Other Points to Keep in Mind:
- The Authority will be responsible for administration, collection, and enforcement of UAE Corporation Tax, while the MOF will remain the competent authority for international tax agreements and the exchange of information for tax purposes.
- Taxable persons’ opening balance sheet for UAE Corporation Tax purposes will be the prior period closing accounting balance sheet, subject to conditions and adjustments prescribed by the Minister.
- Companies must carefully assess the point at which substantive enactment occurs and ensure that their balance sheets are prepared taking into consideration the arm’s length principles.
Key takeaways
The introduction of UAE Corporation Tax is a significant development in the UAE’s tax landscape. Taxable persons must take into consideration the various administration considerations discussed in this blog post, including registration, tax returns, payments, financial statements, Transfer Pricing documentation, record keeping, tax period, clarifications, advanced pricing agreements, tax assessments, and other important points to ensure compliance with the Corporation Tax Law.
