UAE Tax Deadline: Is Your Business Really Ready?

Tim Elliott (0:00)

It's the Morning Drive, it's Mira Business FM, UAE Businesses, facing a critical compliance milestone with September 30th marking the corporate tax filing deadline for companies operating on a standard calendar financial year. Tax experts across the region are warning that simply clicking submit on the Amara Tax portal is only part of the job. So what should businesses be doing now?

My next guest has probably forgotten more than most of us have ever learned about tax, so I'm relying on Sameer Ansari, who is Assistant Manager Client Accountant at Sovereign PPG, joins me in the studio. Good to see you, Sameer.

Sameer Ansari (0:43)

Thank you for having me.

Tim Elliott (0:45)

Lots to discuss with you, so I'm going to fire loads of questions your way and use the benefit of your wisdom and knowledge.

But things like small business relief and free zone nuances and transfer pricing, record keeping, all of that good stuff to come, compliance measures and more. But the thing is at the moment, we're kind of hurtling towards this deadline, September the 30th, for corporate tax filing. When you look across the landscape, the SME landscape in particular in the UAE, are business owners treating this with the urgency it demands? Or are you seeing people looking at it as though it's a box-ticking bureaucracy exercise?

Sameer Ansari (1:30)

Well, it's a good question, actually. So we have seen a bit of both, specifically for SMEs.

It's a different thing for large multinational companies, right? They are aware of the tax compliance they want to do. But for SMEs, you know, because previously there was no corporate tax in UAE. So businesses who have been here for longer periods, you know, they tend to take it with more of a relaxed approach towards it. But, you know, we advise them that it's not something that needs to be relaxed about, right? You must be proactive rather than reactive, right? So because everything, when you're dealing with the tax authorities, everything can lead to fines and penalties, right?

Tim Elliott (2:16)

Well, it can, and ignorance is no excuse, is it? So September 30th is, well, we're on the 14th today. So 16 days to check that box, as it were.

What are the biggest mistakes that businesses need to avoid when they are filing a corporate tax return?

Sameer Ansari (2:36)

Yeah, one of the things that is the most important one is that most of the businesses think that the tax position that they had last year will be the same this year, even though there have been material changes in the business activities during the year.

So if there are material changes in the business activities, so the tax position will inherently change. So that's one thing we have seen from our experiences that the clients need to know. Then obviously, they need to look at their expenses, they need to look at their income, they need to calculate their taxable position. But the most important thing is, you know, they need to be aware of the responsibilities that comes along when they are filing the corporate tax return. Most of the businesses are getting aware because obviously as the things, you know, it's getting older, businesses are getting more informed about it.

So yeah, we have seen a shift from, you know, little understanding to a more increased understanding at this stage.

So we are seeing that businesses have, you know, already put in place an infrastructure during this year, so that, you know, when the deadline comes for corporate tax return, everything is, you know, in place, so that, you know, nothing comes out of the blue for them. So it's a good step.

Tim Elliott (3:59)

Okay, so what's the biggest risk? Is it missing the deadline or is it getting the tax position itself wrong?

Sameer Ansari (4:06)

Yeah, I will go with the second option. So you're getting your tax position wrong is definitely a bigger risk in terms of compliance and a bigger problem as well in terms of fines as well. So, for example, if you miss, you know, your deadline by a month, it's 500 dirhams a month for the first 12 months, and then it's 1000 dirhams a month for any subsequent months after the 12 month period. So for example, if you have, you are not prepared to file your corporate tax returns, it can be any case, like your audited financials are not there, your tax position is not calculated, you have some transfer pressing documents, you know, that are still outstanding. So it's better to get your taxable position correct the first time. So there are two aspects to it. So for example, if you file the corporate tax return, and then, let's say, one month have passed, or two months have passed, you found out internally, which will be a great thing, that your tax position was wrong. You can file a money tax return, there will be no penalties. But if an FTA officer come back with an audit, and it will be down the line, right? Two years after or three years after the filing deadline.