UAE's FTA extends tax filing deadline for new businesses

Companies with tax periods ending on or before February 29, 2024 now have until December 31 to file their return

The UAE introduced the federal corporate tax with a standard statutory rate of 9 per cent starting from the financial year beginning on or after June 1, 2023. Antonie Robertson / The National

The UAE’s Federal Tax Authority (FTA) has announced a deadline extension for corporate tax returns and payments for some entities.

Businesses with short tax periods ending on or before February 29, 2024, can now file their returns and make payments by December 31, 2024, the tax authority said on Sunday.

The decision applies to businesses that were formed, established or recognised on or after June 1, 2023, and have a financial year ending on or before February 29. As a result of these dates, their first corporate tax period is shorter than the usual 12-month period, the FTA said.

“Our goal is to encourage timely and accurate tax filings by offering a reasonable time frame for taxpayers to fulfil their obligations, thereby alleviating undue pressure and potential administrative penalties,” said FTA director general Khaled Al Bustani.

The UAE introduced the federal corporate tax with a standard statutory rate of 9 per cent starting from the financial year beginning on or after June 1, 2023.

It brought the income of companies exceeding Dh375,000 ($102,100) within the taxable bracket. Taxable profits below that level will be subject to a tax of zero per cent.

The Ministry of Finance also confirmed in May last year that business owners in the country would be subject to corporate tax only if their turnover in a calendar year exceeds Dh1 million, ensuring that only business or business-related activity income is taxed.

Earlier this year, the FTA urged all resident eligible commercial entities to register for corporate tax by June 30 to avoid late penalties.

Juridical persons that are subject to corporate tax with licences issued in March and April, regardless of the year of issuance, must submit their tax registration application by the deadline or face an administrative penalty of Dh10,000, the FTA said at the time.