26 Sep 2025
Since the inception of the corporate tax in the UAE in Federal Decree-Law No. 47 of 2022, the standards of compliance have taken a new form across companies of all abilities. Since June 2023, in line with the regulations, all taxable persons, including a resident company, a free zone entity, or some specified natural persons, should submit correct tax filing with the FTA.
Though there is obvious guidance given by law, many businesses continue to grapple with making mistakes in filing. Those few mistakes can translate into administration fines or loss of money or even a long, tough battle with the tax authority. These errors can only be prevented by thorough preparation, complying with laws, and, in most cases, seeking professional advice from a corporate tax provider or a consultant.
Understanding the Basis of Corporate Tax in the UAE
The corporate tax will be imposed on taxable income of the resident and non-resident persons who are conducting business under the provisions of Article 2 of the Decree-Law. The tax is charged at 0% on income up to AED 375,000 and at 9 percent on taxable income above AED 375,000.
The law also recognizes exempt persons, including government entities, qualifying public benefit entities, and qualifying investment funds. Understanding whether a business is a taxable person or an exempt person is the first step to ensuring proper compliance.
Common Corporate Tax Filing Errors and How to Avoid Them
1. Delayed Registration and Missed Deadlines
One of the most common errors is failing to register with the FTA or missing the nine-month deadline for filing tax returns. Every taxable person must register for corporate tax and file on time through the EmaraTax portal.
How to Avoid:
• Register as early as possible.
• Keep track of your financial year-end to calculate the filing deadline.
• Use automated reminders or work with a compliance advisor.
2. Incorrect Classification of Taxable Persons
Businesses tend to designate themselves exempt where they fall under the taxable bracket. As an example of this, a Free Zone Person is only subjected to 0% tax provided that the Free Zone Person qualifies by satisfying Article 18.
How to Avoid:
• Confirm your status as a qualifying free zone person or resident person.
• Seek clarity from the FTA when in doubt.
3. Errors in Accounting Adjustments
According to the Corporate Tax Returns Guide, the reconciliation of the accounting income against taxable revenue needs to be done. A lot of companies misrepresent their profits without making the adjustments of exempt income, non-deductible expenses or transfer pricing considerations.
How to Avoid:
• Prepare a detailed accounting schedule.
• Apply exemptions for qualifying dividends or foreign permanent establishment income.
• Adjust for interest expense limits and related-party transactions.
4. Misapplication of Small Business Relief
Article 21 allows eligible entities to claim Small Business Relief, treating taxable income as nil. However, incorrect claims—such as exceeding the revenue threshold—can invalidate relief and attract penalties.
How to Avoid:
• Verify eligibility under Ministerial Decision No. 73 of 2023.
• Maintain records of turnover for each tax period.
• File accurately even if claiming relief.
5. Incomplete Disclosures on Related Party Transactions
The law requires detailed reporting of related party transactions and connected persons to prevent profit shifting. Omissions or underreporting here are a red flag for the FTA.
How to Avoid:
• Maintain transfer pricing documentation.
• File related party schedules as part of the tax return.
• Ensure all intra-group transactions are at market value.
At this stage, it becomes evident that mistakes often arise not from lack of intent but from complexity. This is where engaging a reliable corporate tax provider becomes invaluable.
6. Overlooking Exempt Income and Reliefs
Income such as qualifying dividends or gains from participating interests may be exempt from corporate tax under Articles 22 and 23. Businesses often fail to apply these exemptions, leading to unnecessary tax liabilities.
How to Avoid:
• Familiarize yourself with participation exemption rules.
• Keep documentation for exempt income ready for audit.
• Cross-check exemptions when preparing the tax computation.
7. Filing with Inaccurate Financial Data
Errors in financial statements directly affect the tax return. Incorrect revenue recognition or failure to reconcile differences between accounting income and taxable income leads to misreporting.
How to Avoid:
• Prepare financial statements in line with Ministerial Decision No. 114 of 2023 on accounting standards.
• Engage an external tax consultant to review your accounts.
• Double-check reconciliations before submission.
8. Late Payment of Corporate Tax
Even if the return is filed on time, failing to pay the tax within the nine-month window triggers penalties. The law imposes administrative penalties and interest for delays.
How to Avoid:
• Calculate tax liability in advance.
• Allocate funds for timely payment.
• Use the EmaraTax portal for instant settlement.
Best Practices for Error-Free Filing
• Plan: You need to prepare your return way ahead of time.
• Maintain Proper Documentation: Have contracts, invoices and financial statements available to be checked by FTA.
• Use EmaraTax effectively: Familiarize your team with the portal functions.
• Engage professional support: Work with licensed tax advisors to ensure compliance.
Avoid Errors and Ensure Smooth Corporate Tax Filing with AMCA
Corporate tax in the UAE is still relatively new, and many businesses are adapting to the requirements. However, errors in corporate tax filing in the UAE can be costly and disruptive. Accuracy is not subject to negotiation, be it in terms of not missing deadlines, the proper application of exemptions, and disclosing related parties. The best model is the proactive model, which is assisted by professional advice.
At AMCA Auditing, we specialize in simplifying compliance for businesses across the UAE. From accurate tax computations to timely filing, our experts ensure you avoid errors and penalties.
Call us at +971 4 240 8784
Email: info@amcaauditing.com
FAQs
1. Who needs to file a corporate tax return in the UAE?
Any taxable person—resident juridical persons, certain natural persons, and non-residents with a permanent establishment in the UAE—must file a tax return.
2. What is the deadline for corporate tax filing in the UAE?
Returns must be filed within nine months from the end of the relevant financial year.
3. Can exempt persons ignore filing obligations?
Exempt persons listed under Article 4 generally do not need to file unless they carry on a taxable business.
4. What happens if I miss the filing deadline?
Administrative penalties, including fines per month of delay, are imposed by the FTA.
5. Should I use a corporate tax provider or file independently?
Although any business can make filing independently, it can be convenient to have a corporate tax consultant to make sure that the filing is correct and to avoid punishment in case of mistakes.
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