UAE’s Official Corporate Tax Return Guide: Transfer Pricing, Tax Elections, & Filing Simplified by FTA

On November 11, 2024, the Federal Tax Authority (FTA) released a pivotal Corporate Tax Return Guide aimed at simplifying the filing process for businesses across the UAE. With the December 31, 2024, deadline fast approaching, this guide sheds light on critical steps, including mastering complex filing procedures, managing transfer pricing (TP) disclosures, and making impactful tax elections. The guide introduces several important concepts and procedures that businesses must be aware of when filing their tax returns.  

Let’s dive into the key insights from the corporate tax return guide: 

1. Accurate Registration is Non-Negotiable 

The UAE corporate tax return consists of up to 20 schedules, but you’ll only see those relevant to your business based on the details you provide during registration on the EmaraTax portal. Completing all fields accurately ensures you avoid unnecessary schedules and potential filing errors. 

2. Transfer Pricing Reporting Requirements 

Businesses engaged in related-party transactions must adhere to stringent reporting requirements: 

• Disclose related-party transactions exceeding AED 40 million, disclosure of aggregate related-party transactions per category (e.g., sale of goods, provision of services, IP, interest) 

• Report connected person transactions above AED 500,000. 

• Dividends paid to related parties don’t count toward these thresholds. 

If transfer pricing adjustments reduce taxable income, FTA preapproval is mandatory. Errors in previous returns can only be corrected if they result in a tax reduction of AED 10,000 or less—larger corrections require separate filings. 

3. Tax Elections Are Binding 

Decisions made in your first tax period—such as opting for the 0% Free Zone rate or applying transitional rules—will apply to future filings. These elections are final, so make them strategically to avoid long-term complications. 

4. Mandatory Attachments and Reporting Employee Data 

All businesses must attach financial statements to their returns. Free Zone entities like DIFC and ADGM must also report the average number of full-time employees, calculated at the start and end of the year. 

5. Data Management is Key 

Tax compliance requires granular data that may not be readily available in your General Ledger (GL), such as HR information or specific transfer pricing details. The guide encourages adopting technology solutions to automate processes, reduce errors, and streamline reporting. 

6. Free Zone Persons (QFZP) and Substance Requirements 

QFZPs opting out of the Free Zone tax regime won’t see related fields in their tax return for the current and next four periods. 

For QFZPs maintaining substance in Free Zones, additional disclosures are required: 

• Full-time employees 

• Operating and capital expenditures 

• Details of outsourced activities, including the provider’s tax registration number and expenditure details. 

Now that you’ve gone through the key takeaways from the corporate tax return guide, it’s crucial to stay on top of UAE Corporate Tax filing requirements to ensure everything is in order, here are the key next steps for businesses: 

Review EmaraTax Information: Ensure that all data on the EmaraTax portal is complete and accurate. This is crucial for determining which schedules will appear on your tax return. 

Complete Transfer Pricing Assessments: Before closing your financial accounts, conduct a thorough transfer pricing assessment to avoid needing downward adjustments that require FTA approval. 

Prepare for Elections: Make your tax elections during the first tax period, as they will carry forward to future periods. 

Meet Free Zone Requirements: If you’re a QFZP, ensure that all substance-related requirements and disclosures are ready and accurate. 

With the FTA’s Corporate Tax Return Guide in hand, compliance is within reach. Focus on accuracy, strategic decisions, and team readiness to meet the deadline confidently. 

Have any questions? Connect with MS and make your tax journey effortless! 

Disclaimer: Content posted is for informational & knowledge sharing purposes only and is not intended to be a substitute for professional advice related to tax, finance, legal, compliance or accounting. No warranty whatsoever is made in this regard, and it is not intended to provide and should not be relied on for tax/finance/legal/compliance or accounting advice. The content posted is subject to future amendments / changes / clarifications in the regulation by the authorities. For any clarifications, you may contact our finance, tax, compliance, legal team.