Hurry! UAE businesses are scrambling to submit their tax returns by September 30th deadline
In the dynamic business landscape of the United Arab Emirates, compliance with corporate tax regulations has become a critical aspect for any organisation. The UAE has recently mandated the use of International Financial Reporting Standards (IFRS) as the accounting standard, bridging the gap between local and international practices.
One of the key challenges businesses face is aligning IFRS with UAE corporate tax requirements, due to discrepancies between the two, particularly in areas such as revenue recognition, expenses, and fair-value adjustments. For instance, IFRS allows flexibility in these areas, while the tax law requires exclusions such as unrealised gains and non-deductible costs.
To navigate these complexities, accountants play a pivotal role in preparing reconciliations from IFRS profit to taxable income and ensuring mandatory disclosures, especially for related-party transactions. Companies should ensure payments to connected persons are benchmarked to satisfy the arm's length principle.
Implementing automated compliance systems, establishing clear transfer pricing policies, and committing to transparent financial reporting standards are key to weaving tax planning into a business strategy. AI-powered tools and cloud-based platforms are transforming how companies handle compliance in the UAE, automating data collection for transfer pricing studies and maintaining complete audit trails.
Companies should also reconcile revenue to VAT filings, verify TRNs, and map book-to-tax adjustments in their ERP. Smaller entities may rely on management accounts for tax filing. Businesses with revenue above Dh50 million and all Qualifying Free Zone Persons (QFZPs) must submit audited accounts.
Timing discrepancies between provisions, impairments, and revenue recognition under IFRS and tax deductibility pose another challenge. To address this, companies should close open intercompany items, document related-party pricing, and prepare the transfer-pricing disclosure that's filed with the return.
To stay compliant, businesses are advised to keep a record of their corporate tax return and payment date, and keep screenshots of all details filed and supporting documents. It is also recommended that companies ensure their bookkeeping and tax returns comply with applicable tax rules well before the September 30 deadline for filing corporate taxes, as this is also the last date to apply for the reduction of income or corporate tax prepayments with the tax office for 2025.
Embracing tax compliance as a strategic advantage rather than a burden is essential for businesses. By doing so, they can build stronger, more resilient operations that position them for sustainable future growth. Companies that prioritise tax compliance are better equipped to navigate the complexities of the UAE corporate tax landscape and thrive in this competitive business environment.
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