Tax Returns and Clarifications under UAE Corporate Tax law

Introduction – Chapter 17 Tax Returns and Clarifications under UAE Corporate Tax law

A Tax Return is filed by the Taxable Person for a particular Tax Period with respect to information of its Corporate Tax Liability and payment thereof. The Tax Return, also referred to as a UAE CT Return, is to be filed within a stipulated period of time with the Federal Tax Authority as per the UAE Corporate Tax Law. Additionally, the Federal Tax Authority can ask the Taxable Person to submit a Financial Statement which relates to its business  activities and financial performance. The Taxable Persons, in case of doubts, can seek clarifications from the Federal Tax Authority. For that purpose, the Federal Tax Authority has released a ‘User Guide’ which provides the form, manner and mechanism in which a Person may seek Private Clarification from the Authority with regards to uncertainty on specific tax matters for which such Person requires further information.

Article 53 – Tax Return to be filed under the UAE Corporate Tax law

A Tax Return is filed with the Federal Tax Authority that contains details about the income of a person in a year and the tax to be paid.Under the UAE’s Corporate Tax Law  Tax Return  to be filed for the relevant Tax Period. Tax Returns are to be filed notwithstanding the amount of income or the status (i.e., whether such entity is active or dormant) of the entity. It is to be filed even if the Person is suffering losses. The UAE Corporate Tax Return is to be filed electronically with the FTA.

When is the Tax Return under the UAE Corporate Tax Law to be filed?

The Tax Return is to be filed within nine (9) months from the end of the relevant Tax Period. Any other date may also be specified by the FTA for filing of the UAE CT Return. Furthermore, it should be noted that  the UAE CT Return is to be filed in such a manner as may be specified by the Authority.

Filing of Tax Return of a Tax Group: The Tax Return for a Tax Group is to be filed by the Parent Company.

Information to be provided by the Taxpayers in the Tax Return filed under the UAE Corporate Tax Law

The Tax Return shall include the following information of the taxpayer:

1. The relevant Tax Period for which the Tax Return is being filed;
2. The Tax Registration Number or TRN of the Taxable Person;
3. The name and address of the Taxable Person;
4. The date of submission of the Tax Return;
5. The accounting basis applied while preparing the Financial Statements;
6. The Taxable Income calculated for the relevant Tax Period;
7. Under Article 37, the amount of the Tax Loss relief claimed by the taxpayer;
8. Under Article 38, the amount of Tax Loss transferred by the taxpayer;
9. Under Articles 46 and 47, the Tax Credit claimed by the taxpayer;
10. The Corporate Tax which is payable in the relevant Tax Period by the taxpayer.

If any additional information or document or record is required by the Authority, it is to be provided  by the taxpayer to the FTA.

Exception to form and manner of filing of UAE CT Return in the cases of National Security or Public Interest

The Federal Tax Authority prescribes the form and manner in which the Tax Return is to be filed. However, in certain cases the disclosure of a Tax Return may cause an impediment to the national security or public interest of the State. Article 53(4) of the UAE Corporate Tax Law empowers the Minister to prescribe the manner in which such Tax Returns should be filed with the Authority.

Specified Entities to submit Declaration with Tax Return under the UAE Corporate Tax Law

Further, the following Taxable Persons may be required to submit a declaration along

with their UAE CT Return on request from the Authority:

1. Qualifying Investment Fund,
2. Qualifying Public Benefit Entity,
3. Public Pension or Social Security Fund,
4. A juridical person that is entirely owned or controlled by certain Exempt Person; and,
5. Any such other person ascertained by the Cabinet, on the suggestion by the Minister

Want to file your Tax Return under the UAE CT Law?

Article 54 – Financial Statements to be submitted under the UAE Corporate Tax law

Financial Statements of a corporate entity depict the financial performance and position of the company. It consists of balance sheets, cash flow statements and income statements. Financial Statements are to be prepared as per the accounting standards in the UAE. The most commonly used Accounting Standard is International Financial Reporting Standards or IFRS.

• Request by Federal Tax Authority to submit Financial Statement

The Taxable Person may be requested by the Federal Tax Authority to submit the Financial Statement that was used by it  for ascertaining its Taxable Income for the relevant Tax Period.

The request by the Authority can be through a notice or decision issued by it.

The Financial Statement is to be provided by the Taxable Person in the form and within the time period as is directed by the Authority.

• Decision by Minister of Finance for certain Taxable Persons to maintain audited Financial Statements

Additionally, the Minister of Finance may issue a decision whereby it may require certain Taxable Persons to maintain and prepare  audited or certified Financial Statements.

• Partner of an Unincorporated Partnership to provide Financial Statements

A partner of an Unincorporated Partnership may be requested by the Federal Tax Authority to submit the Financial Statements for the relevant Tax Period with additional details such as :

1. Total assets, liabilities, expenditure and income of the Unincorporated Partnership
2. The distributive share of each of the partners in Unincorporated Partnership

Article 55 – Transfer Pricing Documentation to be submitted under the UAE Corporate Tax Law

Transfer Pricing documentation provides details regarding the entity’s transactions with its Related Parties and Connected Persons. The FTA ensures that such transactions are in consonance with the arm’s length principle. To learn more about transactions with Related and Connected Parties, please refer to our article on  Chapter Ten: Transactions with Related Parties and Connected Persons.

• Filing of Disclosure regarding Transfer Pricing Arrangements alongwith UAE Corporate Tax Return

The Taxable Person may be required by the Federal Tax Authority to file a disclosure with the Tax Return that contains arrangements and transactions with Related Parties or Connected Persons.

The FTA may request such documentation from the Taxable Person via a notice or decision  in the prescribed manner.

• Request for Additional Information by the Federal Tax Authority

The Federal Tax Authority can make a request to provide additional information related to fulfilment of the arm’s length principle by the Taxable Person in relation to the transactions or arrangements with its Related Parties or Connected Persons.

The Taxable Person will furnish such information within a period of thirty (30) days or any other such date as specified by the Authority.

• When should the Masterfile and Local File be maintained and submitted?

The Minister of Finance may prescribe certain conditions, which if met by a Taxable Person shall mandate it to maintain, a master file and a local file, for purposes of recording information and other relevant details about the Transfer Pricing arrangements of the Taxable Person. In case a request is made by the Federal Tax Authority for submission of  the master file and local file, they shall be provided to the Authority  within a period of thirty (30) days or by any such date as may be prescribed by the Authority.

Article 56 – Maintaining  Record of Documents and Relevant Information under the UAE Corporate Tax Law

The provision specifies the time period for which the Taxable Persons has to maintain the records related to Corporate Tax.

• How long should the records be kept for the purposes of the UAE Corporate Tax Law?

The Taxable Person has to keep the documents and records for seven (7) years after the end of the relevant Tax Period.

• Which Records are to be maintained?

The records to be maintained by the Taxable Persons are as follows:

1. Relating to the supporting information provided in the Tax Return
2. Relating to any other document filed with the Authority

The taxable Perso shall also preserve documents which can help the  the Federal Tax Authority to determine the Taxable Income of the Taxable Person.

• Documents to be maintained by Exempt Persons

Additionally, to enable Federal Tax Authority to determine an Exempt Person’s status, an Exempt Person has to:  Keep the records relating to his status of Exempt Person, for a period of seven (7) years from the end of the relevant Tax Period.

Article 57 – Relevant Tax Period for filing Tax Return under the UAE Corporate Tax Law

The Tax Period is that Period of the Financial Year for which Tax Return is to be filed by the Taxpayer.

Under the provision, the Tax Period will be considered as per the Gregorian Calendar of twelve (12) months period when Financial Statements are prepared by Taxable Persons.

Article 58 – Change of Tax Period under the UAE Corporate Tax Law

Generally, the Gregorian Calendar Year, or the twelve (12)- month period is followed  y corporate entities operating in the UAE, but it is not a stringent law and one can request for a changein the Tax Period to be followed. Providing flexibility, the UAE CT Law allows a Taxable Person to make an application for requesting:

1. Change in the start date of the Tax Period, or
2. Change in the end date of the Tax Period, or
3. A different Tax Period

The Federal Tax Authority can accept the application and can set certain conditions with respct to the following of thenew Tax Period.

Article 59- Clarifications to be requested from the Federal Tax Authority under the UAE Corporate Tax Law

There can be certain doubts and queries in the mind of the taxpayer and to resolve that clarifications can be asked from the Federal Tax Authority.

If there is any clarification required by the Taxable Person relating to:

1. Clarification regarding APA: The doubt regarding the conclusion of the Advance Pricing Agreement or APA regarding a transaction or agreement entered into by the Taxable Person
2. Clarification regarding CT Law: The doubts regarding the application of the UAE’s Corporate Tax Law

In any of these cases, any application can be made to the Federal Tax Authority. Further, the manner and the form of the application will be prescribed by the Authority.