The Federal Tax Authority (FTA) on November 12, 2024, released a tax guide on corporate tax returns detailing the contents and procedures for filing, with the earliest returns due December 31, 2024, for taxpayers whose financial year started on or after June 1, 2023, and ended on or before March 31, 2024.
The guide covers tax return procedures along with transfer pricing thresholds for related-party disclosures. Highlights include:
- The tax return has 20 schedules, and the taxpayer will only be directed to those applicable based on the information filled in the tax registration process. Therefore, the accuracy of information input on the EmaraTax portal is critical so that all required fields appear and can be completed while filing the return.
- If the taxpayer makes an election that applies to more than one tax period (e.g., opting out of 0% rate for free zone persons, realization basis of taxation, application of transitional rules), it will automatically reflect in the taxpayer’s subsequent years’ tax return.
- The thresholds for reporting under the transfer pricing schedule have been specified:
- Reporting is required only when related-party transactions exceed AED 40 million in market value or as per the value in the financial statements.
- Once this threshold is exceeded, only aggregate related-party transactions per category (sale of goods, provision of services, IP, interest, etc.) exceeding AED 4 million need to be disclosed.
- The schedule for transactions with connected persons is to be completed only if the aggregate value exceeds AED 500,000 and for those connected persons where the aggregate benefits exceed AED 500,000.
- Any dividends paid to related parties are to be excluded while computing the above thresholds.
- Transfer pricing adjustments that reduce taxable income will require preapproval from the FTA.
- Any error in the previous tax return that reduces the tax by AED 10,000 or less can be corrected in the current period tax return by way of an adjustment.
- Free zone persons are required to report the average number of full-time employees (i.e., average of full-time employee at the beginning and end of the year).
- It is mandatory to attach financial statements along with the tax return.
Read a November 2024 report prepared by the KPMG member firm in the UAE
Read a November 2024 report prepared by the KPMG member firm in the UAE detailing further insights on the tax guide.