The UAE has implemented a federal corporate tax with a standard rate of 9 percent, effective from the financial year commencing on or after June 1, 2023. This shift aims to enhance regulatory clarity, but recent alterations to reporting timelines have left many businesses scrambling to adapt.

Recently, some companies in the UAE received notifications indicating changes to their financial years for corporate tax reporting. Originally, a small number of entities were informed they needed to file returns by the end of December 2024, a deadline that was unexpectedly moved forward from the end of October 2024 with little advance notice.

While the overall deadline for submitting returns and settling any owed amounts remains unchanged, the backdating of additional months in the reporting timeline poses significant challenges. Many businesses may now face severe implications, especially since the new deadlines have likely already passed. Companies are advised to check their status by logging onto the Federal Tax Authority website to compare their existing corporate tax certificates with the latest updates.

The recent changes are expected to add work and costs, particularly for larger organizations. These businesses will need to conduct annual external audits, which may now require adjustments due to the revised timelines. Multinational corporations that share a financial year across subsidiaries could find their initial reporting periods altered, although regulatory authorities have suggested that alignment may be possible in the future.

The most pressing concern lies with those businesses that had meticulously planned for the transition to corporate tax. Many had made significant structural changes based on the original guidelines, including the formation, closure, or merger of entities, and adjustments to contracts and asset management. With the new timelines potentially disrupting these carefully laid plans, businesses must now assess the impact of these changes on their operations.

The Ministry of Finance issued a ministerial decision on May 16, 2023, outlining transitional rules for corporate tax, which included guidelines for adjusting a taxable person’s opening balance sheet under the new law. This decision generated considerable discussion, and companies may wish to consider appealing the changes, particularly by emphasizing the advantages of maintaining regulatory certainty in the UAE.