Financial Records Required for Corporate Tax Registration and Filing Returns

Do you know the financial records for corporate tax registration and filing returns? Before heading into that, get to know more about UAE corporate tax. The UAE Government announced on January 31, 2022, that the UAE would be enacting legislation to levy federal Corporate Tax (CT) on company profits, which would be effective for the tax period beginning on or after June 1, 2023.

For many years, the UAE was considered a tax-free zone, but in order to comply with the OECD's recommendation of implementing a global minimum effective tax rate under Pillar Two of the Base Erosion and Profit Shifting (BEPS) Project, the UAE announced a 9% corporate tax on business profits.

However, in order to file a Corporate Tax, the applicable person must require certain documents. In this article, you will find more about the financial records needed for corporate tax registration and filing returns. 

What financial records are required for Corporate Tax?

Businesses in the UAE should ensure corporate tax compliance by keeping financial and other records that explain the information outlined in the corporate tax return. Such papers should also be submitted to the Federal Tax Authority. (FTA). Entities exempt from UAE corporate tax will be expected to keep records in order for the FTA to determine their exempt status.

Businesses must be prepared to present the necessary documents in order to register for Corporate Tax in UAE. The registration and payment of business taxes will be done online. The documents listed below may also be needed for corporate tax registration in the UAE.

• Trade License Copies (must not be expired).
• Passport photocopy of the license's owner/partners (must not be expired).
• License's owner/partner's Emirates ID (must not be expired).
• Power of Attorney (or Memorandum of Association) (POA) 
• Contact information (Mobile Number and Email).
• Company contact information (complete address and P.O. Box).
• Report on the Annual Financial Audit.

Major points to be kept in mind regarding the records to be maintained under Corporate Tax

1. Exempt entities are also required to keep the records that prove and maintain their exempt status.
2. The record must be maintained for at least seven years from the end of the tax period.
3. The tax group entities cannot maintain consolidated financial statements or records until the group consists of UAE resident entities that have applied for the UAE tax group.
4. Regarding the requirement of audited financial records, only those entities are required to maintain them that are included in the list provided by the minister.
5. Upon request, the taxable entities will be required to produce the financial statements and records, along with the Corporate Tax returns to the FTA

Filing of Corporate Tax Returns in UAE

For each tax period, businesses will be required to prepare and submit only one UAE corporate tax return and other related supporting schedules to the FTA. Businesses in the UAE are not required to submit a provisional corporate tax return or make corporate tax advance payments. These concessions will assist the government in reducing the administrative load on taxpayers to a bare minimum.

Entities must send each tax return and associated supporting schedules to the FTA within nine months of the end of the applicable tax period.

You can also read: Everything You Need to Know About Corporate Tax

When should you apply for Corporate Tax in UAE?

According to corporate tax law, the federal tax authority will assign the registration procedure on or before June 2023. And according to the Ministry of Finance, businesses in the UAE will have up to 26 months for businesses with financial years 1 June–31 May and 33 months for businesses with financial years 1 Jan to 31 Dec to file their tax returns and pay federal corporate tax. 

Businesses must register with the Corporate Tax (CT) and pay the applicable tax sum before the time limit expires.

How should you go about registering for Corporate Tax?

Online registration for UAE Corporate Tax is available. The FTA has made EmaraTax available as an online method for corporate tax registration and payment since the new EmaraTax platform was released in the UAE to manage an efficient taxation process in the country. EmaraTax is now accepting corporate tax registrations for selected companies until June 2023. To know more, check out this article: "Federal Tax Authority Opens Pre-Registration for Corporate Tax.".

Why is it important to keep accurate financial records for filing CT?

Keeping accurate financial records is crucial for filing corporate tax in UAE for several reasons:

1. Compliance with laws and regulations: UAE tax authorities require businesses to keep accurate and complete financial records to ensure compliance with tax laws and regulations. Failure to maintain proper financial records can result in penalties, fines, and even legal action.
2. Accurate tax calculations: Accurate financial records enable businesses to calculate their taxable income correctly. Without accurate financial records, businesses may overpay or underpay their taxes, which can lead to penalties, fines, and audits.
3. Transparency: Keeping accurate financial records promotes transparency in business operations. Accurate financial records allow stakeholders, such as investors, lenders, and regulators, to assess the financial health and stability of the business.
4. Better decision-making: Accurate financial records provide valuable insights into the financial performance of a business. This information can be used to make informed business decisions, such as determining the feasibility of new projects, identifying areas of financial inefficiency, and forecasting future financial performance.

How can CDA help you file Corporate Tax and maintain your records?

If your business operates in a UAE-free zone and you want to take advantage of the 0% corporate tax rate, you must ensure that your financial statements are audited with the help of the CDA. While company laws and regulations determine the need for auditing for businesses outside free zones, free zone businesses must comply with this requirement. To ensure that your financial statements meet the necessary standards and regulations, we highly recommend consulting with CDA. Our team can provide you with all the information you need to know about auditing your financial statements and help you comply with the regulations. 

Contact us today to learn more about this essential requirement and how we can assist you.