Filing, Refund, and Payment of Corporate Tax in UAE

Understanding the process of filing, refunding, and payment under the UAE corporate tax law is essential for businesses operating in the country. This article will explain the key aspects of filing tax returns, seeking refunds, and making payments, as per the Corporate Tax Explanatory Guide. Thus, Taxable Persons are advised to seek the expert services of trusted Tax Consultants in UAE to ensure compliance with the corporate tax statute effectively.

Filing Corporate Tax Returns:

To promote clarity and timely collection of taxes, the Corporate Tax Law specifies a timeline and deadline for paying corporate tax. According to Article 48, the corporate tax payable must be settled within nine months from the end of the relevant tax period, or by a date directed by the Authority. Importantly, this due date is in line with the filing of tax returns (as outlined in Article 53). Aligning payment and filing dates ensures compliance with the corporate tax law.

Self-Assessment

Corporate tax in the UAE is a self-assessed tax, meaning that businesses are responsible for calculating and reporting their tax liability accurately. Taxable Persons can determine their tax liability by considering their taxable income and applicable tax rates. This self-assessment approach streamlines the tax process and minimizes the administrative burden on taxpayers.

Penalties for Late Payment:

Failure to pay corporate income tax by the due date specified in the Corporate Tax Law results in violations of both the Corporate Tax Law and the Tax Procedures Law. Consequently, taxpayers who miss the deadline will be subject to penalties as stipulated by the applicable regulations.

Corporate Tax Refunds:

Article 49 of the Corporate Tax Law outlines the circumstances in which a Taxable Person can apply for a refund of corporate tax. The Authority allows for refunds when the following conditions are met:

Withholding Tax Credit Exceeds Corporate Tax Liability:

If a Taxable Person has available withholding tax credits, as per Article 46(1), that exceed their corporate tax liability for a particular tax period, they can apply for a refund.

Overpayment of Corporate Tax:

The Authority may refund corporate tax in UAE if it is satisfied that a Taxable Person has paid more corporate tax than their actual liability.

Refund Application Process:

To obtain a refund, a Taxable Person must apply to the Authority following the processes and procedures specified in the Tax Procedures Law. The Tax Procedures Law governs the administrative aspects of corporation tax and other federal taxes in the UAE. Once the refund application is submitted, the Authority will respond by issuing a decision in accordance with the Tax Procedures Law. This standard practice ensures consistency and fairness in refund requests.

Can I file my tax returns and make the payment at the same time?

In line with the self-assessment nature of the corporate tax, taxpayers can pay their corporate tax liability while filing their tax returns. The due date for both activities coincide, reducing the compliance burden.

Failure to pay corporate tax on time?

Failure to pay corporate tax in UAE by the specified due date is a violation of the Corporate Tax Law and the Tax Procedures Law. As a result, you will be liable for applicable penalties as per the regulations.

How can I apply for a corporate tax refund?

To apply for a corporate tax refund, you need to follow the processes and procedures outlined in the Tax Procedures Law. Submit your refund application to the Authority, which will then issue a decision based on the provisions of the law.

Which authority manages and regulates corporate tax?

The federal tax authority is the main regulatory authority that manages all corporate tax affairs in the UAE. All filings and payments will be made to the federal tax authority through its website for corporate tax. Imposing penalties is also the job of FTA and you can consult the FTA only to inquire about the penalty you received.

Conclusively, understanding the processes of filing, refunding, and payment under the UAE corporate tax law is essential for businesses to ensure compliance and avoid penalties. By aligning the payment deadline with the filing of tax returns, the UAE aims to simplify the process for taxpayers. Furthermore, the provision for refunds acknowledges cases where overpayment occurs or where withholding tax credits exceed the corporate tax liability. By adhering to the regulations and utilizing the procedures outlined in the Tax Procedures Law, businesses can navigate the corporate tax system effectively and efficiently. Thus, it is advisable to seek the expert services of trusted Tax Consultants in UAE.