The UAE’s corporate tax system is now in full effect, and some businesses have already filed their first tax returns, marking a significant milestone since the country introduced the tax in June 2023. Companies licensed in June 2023, whose financial year ended by February 29, 2024, had until December 31, 2024, to submit their returns and make payments, according to the Federal Tax Authority (FTA).

For most other companies in the UAE, the majority will need to file their corporate tax returns by September 2025. However, for businesses formed in mid-2023, the deadlines came earlier due to specific financial year rules. These companies were required to prepare their first tax period as June to December 2023, a seven-month stretch, as per UAE regulations.

The FTA has also announced penalties for those who miss their tax payment deadlines. A monthly penalty of 14% per annum will apply, starting the day after the deadline. Businesses have a maximum of nine months after their tax period ends to make payments, as outlined in Federal Decree-Law No. 47 of 2022.

Tax experts are urging companies to stay vigilant. According to Jitendra Gianchandani, Chairman of JCA, many businesses are still struggling to fully understand the complexities of the corporate tax system. While some have a basic understanding, others lack clarity on important aspects like loss carryovers or handling prior year transactions.

Filing tax returns is done online through the FTA’s Emaratax portal, which requires businesses to conduct thorough self-assessments. Experts emphasize the importance of keeping accurate financial records, as penalties for non-compliance could be severe.

With the UAE’s corporate tax rate set at 9%, the first wave of tax filings has highlighted the need for businesses to adapt quickly to the new system. Tax consultants have noted an uptick in business formations throughout 2023, making it critical for companies to ensure their tax obligations are met on time.