What you need to know

Every business in the UAE must do these three things to comply with the new corporate tax scheme:

1. Register for corporate tax from June 2023 onwards.
2. Keep proper accounting records.
3. File a corporate tax submission with the Federal Tax Authority.
While not all businesses have to pay corporate tax, every business must still register and comply with these steps to verify that they are eligible for tax exemption.

What is Corporate Tax

The corporate tax is levied on the taxable income of business establishments registered in the United Arab Emirates. The new taxation policies will come into effect from June 1, 2023, when many businesses operating in the UAE mainland will be subject to taxation based on their annual net profit.

What are the penalties

• Failure to keep the required records and other information specified in the tax laws – AED 10,000 for each violation, or AED 20,000 in each case of a repeated violation from the date of the last violation.
• Failure to submit data, records and documents related to Tax in Arabic to the Federal Tax Authority (FTA) when requested – AED 5,000
• Failure to file a Tax Return within the specified timeframes – AED 500 for each month (or part thereof) for the first 12 months, and AED 1,000 for each month (or part thereof) from the 13th month onwards.
• Failure to submit a Tax Return within the required timeframe - AED 500 for each month (or part thereof) for the first 12 months, and AED 1,000 for each month (or part thereof) from the 13th month onwards.
• Failure to settle the Payable Tax – A monthly penalty of 14% per year, for each month or part thereof, of the unsettled Payable Tax amount from the day following the due date of payment and on the same date monthly onwards.
• Submitting an incorrect Tax Return – AED 500 unless the Tax Return is corrected before the deadline for submission