The Federal Tax Authority (FTA) continues to provide flexibility for businesses adapting to new tax regulations in the UAE. FTA Decision No. 7 of 2024 introduces extended deadlines for corporate tax filing and payment, offering relief to businesses incorporated after 1 June 2023. This decision is particularly relevant for companies with shorter tax periods, ensuring they have additional time to meet their tax obligations. However, for businesses with tax periods ending after 29 February 2024, the standard nine-month rule remains unchanged.

What is FTA Decision No. 7 of 2024 of Corporate Tax Filing and Payment?

FTA Decision No. 7 of 2024 applies to taxable persons incorporated, established, or recognized in the UAE on or after 1 June 2023. These businesses have been granted an extension if their tax period ends on or before 29 February 2024. They are now required to file their tax return and settle corporate tax payable by 31 December 2024. Prior to the entry into effect of FTA Decision No. 7 of 2024, entities would have had to file its Tax Return and settle the Corporate Tax Payable by 30 September 2024.

Here is an example:

Company A, incorporated in Dubai on 12 June 2023, has chosen its financial year to run from January to December. Consequently, its first tax period spans from 12 June 2023 to 31 December 2023. However, in light of FTA Decision No. 7 of 2024, Company A’s deadline to file its corporate tax return and settle any payable tax has been extended. The new deadline for these actions is now 31 December 2024, providing the company additional time to fulfil its tax obligations.

Corporate Tax Filing and Payment: Who Does the Extension Apply To?

The decision mainly affects businesses with short tax periods, particularly those incorporated mid-year. Below is a breakdown of how the extended deadlines of corporate tax filing and payment apply to different businesses:

1. Tax Period Ending 31 December 2023
   For businesses incorporated in June or 1^st July 2023, and those operating on a January to December financial year, the original deadline for filing tax returns and settling tax liabilities was 30 September 2024. However, this has now been extended to 31 December 2024, providing an additional three months to meet their obligations.

• Tax Period Ending 31 January 2024
  Businesses incorporated in June, July, or 1^st August 2023, operating on a February to January financial year, had an initial deadline of 31 October 2024. This has also been extended to 31 December 2024, giving them extra time to complete their tax filings and settle any payable taxes.
• Tax Period Ending 29 February 2024
  For companies incorporated in June, July, August, or 1^st September 2023 with a March to February financial year, the previous deadline of 30 November 2024 has now been pushed to 31 December 2024, allowing additional time to fulfill their corporate tax responsibilities.

• Short Tax Period due to Cessation of Business
  Businesses that ceased operations, dissolved, or liquidated by 29 February 2024, were initially required to settle their tax filings by the earlier deadlines based on their tax periods. With the new extension, all applicable businesses now have until 31 December 2024 to file their returns and settle their tax liabilities.

Corporate Tax Filing and Payment: Key Takeaways for Businesses

• New Deadline for Certain Entities: If your business was incorporated or recognized on or after 1 June 2023, and your tax period ends on or before 29 February 2024, you have until 31 December 2024 to file your tax return and settle your corporate tax payable.
• Penalties from 1 January 2025: Administrative penalties will apply from 1 January 2025 for businesses that miss the new deadlines set by the FTA.

Corporate Tax Filing and Payment: Penalties for Non-Compliance

Failing to meet the filing deadline can lead to severe financial consequences for your business. Understanding the penalties associated with non-compliance is essential:

• Non-filing Penalty: Businesses that fail to submit their tax returns on time will incur a penalty of AED 500 per month for the first 12 months. After this period, the penalty increases to AED 1,000 per month. This cumulative effect can lead to significant financial burdens over time.
• Failure to Settle Payable Tax: In addition to filing penalties, any outstanding tax amounts will attract a 14% annual penalty, which is calculated monthly. This penalty applies to the total payable tax that remains unsettled after the deadline, further compounding the financial implications for non-compliant businesses.

How MS Can Assist in Corporate Tax Filing and Payment

At MS, we provide comprehensive support for corporate tax filing, ensuring that businesses fulfil their tax obligations efficiently and accurately. Our process begins with a thorough assessment of each client’s tax requirements, followed by organizing financial records and identifying the correct tax period. Our team of experts calculates tax liabilities with precision and manages the entire filing process to ensure compliance with UAE regulations. We stay informed on the latest tax law updates and offer strategic tax planning to help minimize liabilities. Additionally, we handle filing deadlines by sending timely reminders and offer post-filing support to address any penalties or disputes.