Expert Insight: Shaarik Shafeek, Financial Consultant at Kelmer Group
As businesses in the UAE navigate the corporate tax (CT) landscape, it is essential to understand how taxable income, tax periods, and filing deadlines impact compliance.
With the UAE Corporate Tax regime now in effect, here’s a clear breakdown of what companies need to keep in mind.
1.Does Everything Count?
Not all income is subject to corporate tax. While taxable income includes most profits earned by a business, certain types of income are exempt.
For example, local dividend income is exempt from corporate tax, meaning businesses receiving dividends from UAE-based entities will not be taxed on this income.
Understanding these distinctions is crucial for tax planning and compliance.
2. Tax Period for Juridical person
Corporate tax is calculated and paid based on a 12-month tax period, which aligns with a company’s financial year. It is not a monthly or quarterly tax but an annual obligation.
The key factor in determining your first tax period is whether your financial year starts on or after June 1, 2023. Here’s how different financial year structures impact the first tax period:
Scenario :1
If your company has January to December Financial Year
• Since January 2023 started before June 1, 2023, the first tax period begins on January 1, 2024 – December 31, 2024.
Scenario :2
If your company has July to June Financial Year
• Since July 2023 comes after June 1,2023, the first tax period starts on July 1, 2023 – June 30, 2024.
3. Corporate Tax Filing and Payment Deadlines
Businesses must submit their CT return and payment 9 months after the end of the tax period. Here are some examples:
• Tax period ends December 31, 2024, → Deadline: September 30, 2025
• Tax period ends June 30, 2024, → Deadline: March 31, 2025
4. Tax Period for Natural Persons
The Federal Tax Authority (FTA) Corporate Tax Guide explains that the term “natural person” refers to a living human being, regardless of age, whether they reside in the UAE or outside it.
For individuals classified as natural persons under the corporate tax framework, the tax period follows a Gregorian calendar year (January to December) rather than the business’s financial year.
5. Corporate Tax Registration for Natural Persons
If your business turnover exceeds AED 1 million in a calendar year, you are required to register for Corporate Tax.
Recently FTA, has announced that if a natural person is conducting a business or business activity in the UAE during the calendar year 2024 or subsequent years, and their total turnover in that calendar year exceeds AED1 million, they are a Taxable Person,
who must register for Corporate Tax no later than 31st March of the calendar year following the year in which their total turnover exceeded the AED1 million threshold and comply with all their Corporate Tax obligations.
Let’s say if your business already exceeded 1 Million in revenue by November 2024, you must register under Corporate tax no later than March 31, 2025.
Businesses failing to register within the timeline would end with a penalty of 10,000 AED.
6. Reliefs Introduced Under the FTA: Natural Person Relief and Small Business Relief
Two key reliefs have been introduced to help startups and small enterprises thrive in an increasingly competitive market.
These reliefs are the Natural Person Relief and the Small Business Relief. Let’s take a closer look at both initiatives and how they are designed to support emerging businesses.
- Natural Person Relief (Turnover Below AED 1 Million):
If your total turnover is below AED 1 million in the current calendar year, you do not need to register for Corporate Tax (CT) or file a CT return.
This relief applies to both UAE residents and non-residents conducting business in the country, providing a significant financial advantage for small entrepreneurs and sole proprietors.
- Small Business Relief (Turnover Between AED 1 Million – AED 3 Million)
For businesses with a turnover between AED 1 million and AED 3 million in your current tax period to all the previous tax year, you can apply for the small business relief.
The Small Business Relief offers the ability to register for CT, submit simplified returns and avoid paying Corporate Tax.
This relief is only limited until 31 December 2026.And would be not available to the non-resident businesses.
My Thoughts: Expertise is Key for Corporate Tax Compliance
Filing corporate tax in the UAE is not just about meeting deadlines—it’s about ensuring compliance while optimizing your tax position.
Many businesses in the UAE have a common misconception that corporate tax is “easy” due to its straightforward rates and exemptions. However, this perception exists only in comparison to the well-structured tax systems of other countries.
The reality is that UAE Corporate Tax is still in its early stages and will continue to evolve with more regulations, clarifications, and compliance requirements over the years.
What may seem simple today can become far more complex as the framework matures. This is why expert knowledge is crucial—not only to meet legal obligations but also to strategically utilize exemptions, deductions, and planning opportunities in the most efficient way.
As the UAE tax system becomes more structured, businesses that invest in expert guidance today will be in the best position to navigate complexities, minimize risks, and maximize tax benefits in the future. If you want to ensure your company is on the right track, let’s connect and discuss how you can make the most of the UAE Corporate Tax framework.
For more details, contact the experts at Kelmer Group to receive personalized assistance in managing tax compliance in the UAE and other international jurisdictions.