The Federal Tax Authority (FTA) of UAE has announced a significant extension for the tax return filing deadline for businesses. This decision provides great relief and provided more time until December 31, 2024 to gather adequate documents and complete their tax filing accurately for the year ending on or prior to 29 February 2024 .
FTA’s decision to extend the deadline demonstrates their commitment to support taxpayers in UAE and ensure compliance with tax obligations. By allowing additional time, FTA strives to alleviate undue financial burden on individuals and entities and streamlines tax filing procedure seamlessly. Sounds interesting? In this guide, we will navigate you through essential details regarding recent FTA’s decision on extending the deadline for corporate tax return deadline for your better understanding.
Background
In 2022, UAE imposed Federal Decree Law No. 47 of 2022 for Corporate Tax in order to align the nation with global tax practices and diversify its revenue base. This law is applicable for residents and non-resident companies earning in the UAE, to make sure entities contribute to the national economy.
However, to ensure complete tax compliance, FTA announced Decision No. 7 of 2024 on 25th September 2024, and extended the deadline for corporate tax return filing and payment of tax liabilities, especially for companies incorporated on or after June 1, 2023. This decision makes sure businesses determine their responsibilities, and meet with tax obligations feasibly.
Overview Of Decision No 7 of 2024
Decision No. 7 of 2024 was issued by the Federal Tax Authority (FTA) of UAE, and outlined an essential extension of the deadline for businesses to file corporate tax returns and settle tax liabilities within a feasible time frame.
This decision was in response to several challenges faced by several businesses due to complexities of the new corporate tax regime in the UAE. Moreover, this extension strives to grant entities additional time to complete tax filings and to meet the compliance requirements.
Deadlines – Filing Corporate Tax Returns and Tax Payments
Article 2 of Decision no 7 of 2024 highlights deadlines for tax return filing and tax payments for businesses incorporated after June 1, 2023.
This decision has extended deadlines for corporate tax return filing and settlement for corporate tax payable with specific conditions to streamline the process and encourage businesses to thoroughly assess their financial records and submit adequate documentations to meet with tax obligations.
| Conditions | Provision | Deadline |
| Where a Taxable person was established, incorporated, or recognized under applicable UAE legislation on or after June 1, 2023 andTax period of taxable person ended on or prior to February 29, 2024 | The deadline for filing the Corporate Tax Return shall be | December 31,2024 |
| Where a Taxable person was established, incorporated, or recognized under applicable UAE legislation on or after June 1, 2023 andTax period of taxable person ended on or prior to February 29, 2024 | The deadline for settlement of Corporate Tax Payment shall be | December 31,2024 |
Abrogating Conflicting Provisions
Article 3 of the decision no 7 ensures that regulatory provisions that may conflict with this decision will be nullified. This will help to reinforce the authority of the decision and ensures that businesses adhere to recent guidelines accurately. By eliminating conflicting provisions, FTA s
trives to offer clarity and eliminate confusion regarding process and deadlines for tax filing and payment.
Consequences of Non-Compliance
Non-compliance with tax return filing and settlement of new deadlines can cause businesses to face legal and financial consequences. UAE’s FTA have also outlined significant penalties under Federal Decree Law No. 47 of 2022 to ensure compliance with corporate tax regime.
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- Late Tax Filing Penalties: Businesses that fail to submit corporate tax returns by December 31, 2024, are more likely to face monetary penalties. However, these penalties can increase with increasing delays, which can add up financial pressure on entities.
- Interest on Outstanding Tax: Failure to settle corporate tax payable by extended deadline – 31st December 2024, can lead to interest charges on outstanding tax amount. This interest accumulates daily, and increases financial burden.
- Potential Audit Requirement: Non-compliance or submitting inaccurate tax returns can trigger thorough tax audit requirements by FTA in UAE. Audits are usually thorough reviews on an entity’s financial records and cause companies to pay penalties if any discrepancies are found.
- Legal Sanctions: In some severe cases, non-compliance with adequate corporate tax return filing as per the deadline can lead into legal actions such as suspension of business license or operational sanction which can disrupt your business activities.
- Reputational Damage: Non-compliance with tax return filing can damage your business reputation and can lead to losing trust among your partners, customers, and even investors.
Final Thoughts
Federal Tax Authority Decision No 7 of 2024 has outlined clear guidelines for the process of filing corporate tax returns and settlements of corporate tax payable for the businesses that were incorporated, established on or after June 1, 2023 and Tax period of taxable person ended on or prior to February 29, 2024. This decision has further extended the deadline to December 31, 2024 with certain conditions to streamline the process. Failure to comply with this deadline can cause certain financial penalties, interest charges, and even legal consequences. Hence, it is important for businesses to adhere to the new guidelines and meet with tax obligations timely to avoid disruptions in business operations. If you want to learn more about new guidelines, or streamline your corporate tax return filing process, contact N R Doshi Experts today!
