How Tax Agencies Streamline Corporate Tax Filing in the UAE

UAE introduced the Corporate Tax law, policies, procedures, decisions, etc., which emphasizes the taxable persons must fulfil the obligation as per the regulations, which includes timely registration, accurate tax filing before the deadline, record keeping, etc. This is where tax agencies step in, which can play a vital role in providing guidance to businesses in the UAE about every aspect of Corporate Tax, especially filing Corporate Tax returns with zero errors. An efficient tax agency can handle ongoing tax matters along with tax optimization and reduce financial risk.

In this article, we will explore the importance of a professional tax agency in filing corporate tax returns and how the tax agency can assist businesses to comply with Corporate Tax law and procedure without incurring potential penalties.

Understanding Corporate Tax Obligations in the UAE

Corporate Tax is imposed on businesses in the UAE, and it is a direct tax in nature. As per the general tax rules, a business that makes more than AED 375,000 is subject to tax at 9% on the excess profit generated. On the other hand, the UAE authority has announced many reliefs for the taxpayers, including Small Business Relief UAE is not imposing taxes on the individuals who earn income by way of wages real estate investment or personal investment.

It is crucial for businesses to understand the Corporate Tax law not only to make sure of the correct tax filing but also to avail of the benefits outlined in the Corporate Tax law.

Essential Steps in Corporate Tax Filing

Corporate tax filing in the UAE includes several steps:

• Tax Registration with the Federal Tax Authority (FTA): A business that is required to be registered and obtain the Tax Registration Number (TRN) before the deadline specified in the FTA Decision No. 3 of 2024.
• Accurate Financial Reporting: Financial reporting is very important. A business must maintain the book of accounts as per IFRS or IFRS for SMEs. The calculation of corporate tax starts with accounting profit prepared as per IFRS, and various adjustments are applied to arrive at the taxable profit and calculate the tax liability.
• Submission of Tax Returns: UAE corporate tax filing deadlines must be met in order to avoid penalties. Article 48 of the Corporate Tax Law explains that a taxable person must submit the corporate tax return within 9 months from the end of the relevant tax period.
• Documentation and Record-Keeping: The compliance requirement continues even after filing the tax return by way of keeping the records related to the Corporate Tax return filed. All businesses must keep the records related to Corporate Tax returns filed for a minimum period of 7 years after the end of each tax period (Article 56 of Corporate Tax Law)

Given that multiple steps are involved to comply with the tax procedures, the role of a qualified tax agency is inevitable in the UAE for businesses to meet Corporate Tax obligations, reduce compliance risk, and have more focus on business growth.

How a Tax Agency Simplifies Corporate Tax Compliance in the UAE

1. Expert Knowledge of UAE Tax Regulations

UAE Ministry of Finance and Federal Tax Authority keep updating the businesses through many cabinet Decisions, Ministerial Decisions, Public Clarifications, Guides etc. There are many updates from the authorities which are very important for businesses. The tax agencies who has expert tax agents are up to date with the latest regulations will give confidence to business owners to approach UAE Corporate Tax filing with confidence when they are guided by qualified tax agencies.

2. Accurate Financial Analysis and Reporting

Corporate Tax filing requires accuracy. There can be common mistakes, like considering the non-deductible expenditures, which can lead to potential penalties. A qualified tax agency overlooks the financial statement, applies the computation as per the Corporate Tax Law and calculates the taxes on the taxable income. While we doing analysis, make sure that;

• All revenue is reported accurately,
• Applicable deductions are maximized, and
• Tax credits, where applicable, are fully utilized.

These elements are crucial in tax filing and appointing a qualified tax agency, like Flying Colour Tax Consultant, can ensure the accuracy in reporting and compliance as per the country’s law.

3. Deadline Compliance and Penalty Avoidance

Deadline is key while handling Corporate Tax. Missing deadlines can result in paying administrative penalties. Deadlines start with Corporate Tax registration which continues like corporate tax return filing, updating the FTA with the latest information etc. A tax agency can keep your tax compliance calendar to remind you of the deadline well in advance and make sure that the tax compliances are taken care of well in advance.

Benefits of Professional Tax Assistance Beyond Filing and Compliance

While compliance is the core function of tax agencies, the benefits of hiring a tax agency extend beyond meeting deadlines and avoiding penalties.

➦ Strategic Tax Planning and Optimization

Tax advisories are on an ongoing basis is an add-on benefit of appointing a qualified tax agency like Flying Colour Tax Consultant. All businesses require strategic tax planning and optimization of tax and without an expert, this will not be possible. Unhealthy tax strategies can result in incorrect tax reporting and tax evasion. Tax planning services from tax agencies can include:

• Identifying opportunities for deductions and credits,
• Advising on tax-efficient structuring of transactions, and
• Providing guidance for minimizing corporate tax liabilities.

Strategic tax planning allows UAE businesses to align their financial goals with tax regulations, optimizing their overall tax strategy for increased profitability.

➦ Insightful Reporting for Better Business Decision-Making

Most of the business decisions may have an impact on either compliance or taxation. All businesses must analyze their tax implication and compliance requirements to be taken care of before any major changes in the businesses which include acquisition, structural changes etc.

Example: - If a business changes more than 50% shareholders and changes the core business operations, the tax losses cannot be carried forward. If a business has incurred tax loss can carry forward and set off against taxable income. While planning a restructuring, the business should keep in mind that certain actions can end in losing the eligibility for tax loss carry forward.

➦ Streamlined Documentation and Record-Keeping

Comprehensive record-keeping is a critical aspect of corporate tax compliance. The FTA requires businesses to keep detailed records, including but not limited to;

• Financial statements,
• Bank records, and
• Transaction documentation.

The documents must be kept for a minimum period of 7 years from end the of the relevant tax year. Tax Agencies can manage the documentation requirement as per Corporate Tax Law which are retrievable in the event of a tax audit from the Federal Tax Authority.

Mitigating Risks the Compliance and Security Role of Tax Agencies

Corporate tax compliance carries inherent risks, especially when the country is going through the initial tax years.  By hiring a professional tax agency, businesses can reduce these risks, by utilizing the subject knowledge and expertise in tax matters.

(I) Minimizing Errors in Tax Reporting

Error in Corporate Tax filing may be due to many reasons like lack of knowledge of Corporate Tax law, not being up to date with recent announcements from authorities etc. A professional tax agency who are well aware of the changes in the laws and procedures can help businesses to report their Corporate Tax timely without errors.

(ii) Support in FTA Audits and Representation

In the event of a Corporate Tax audit by the FTA, having a tax agency as a compliance partner cannot be valued. An experienced and qualified tax agency can become the part of tax audit along with business representatives and can help them in providing information, documentation etc. as required by the authority. Also, a tax agency can represent their clients in front of the FTA to explain the matters and execute the work.

(iii) Specialized Services for Foreign-Owned and Complex Business Structures

For Businesses who expand to UAE by way of branch or subsidiary companies in UAE who have international operations (Cross-border transactions) must know about the benefits which can be availed as well as the compliance to be taken care including Double Taxation Agreements signed by UAE and Foreign Tax impact on the cross-border transaction. Involving a tax agency in your business’ international operations and in the operations of your foreign business in UAE gives a peace of mind in compliance and get the benefits of tax treaties.

Key Considerations for Choosing a Tax Agency in the UAE

Selecting the right tax agency is essential for effective corporate tax management. When choosing a tax agency, consider the following factors;

• Expertise in UAE Corporate Tax Law: - Ensure the agency has a team of certified tax agents who have expertise in Corporate Tax Law and experience in handling complex matters.
• Knowledge of Industry-Specific Requirements: - Choose a tax agency familiar with your industry, since the tax implication industry-wise may change.
• Transparency and Communication: - Select an agency that provides you with continuous support, and transparency and keeps you updated on all the changes in tax regulations

Flying Colour Tax Consultant LLC is a trusted tax agency in the UAE, offering comprehensive corporate tax filing services designed to help your business stay compliant and financially optimized. From tax registration to documentation and audit support, we offer a full suite of tax services for UAE businesses. Contact us today to discover how our team of experts can assist your business in achieving efficient, compliant, and optimized corporate tax filing.

To learn more about The Role of Tax Agencies in Corporate Tax Filing in the UAE, book a free consultation with one of the Flyingcolour team advisors.

Disclaimer: The information provided in this blog is based on our understanding of current tax laws and regulations. It is intended for general informational purposes only and does not constitute professional tax advice, consultation, or representation. The author and publisher are not responsible for any errors or omissions, or for any actions taken based on the information contained in this blog.