Overview
The Federal Tax Authority (FTA) has issued Decision No. 7 of 2024, effective from 25 September 2024, to postpone the deadline for certain taxpayers in the UAE to file their Corporate Tax Returns and settle Corporate Tax Payable. This decision amends the previously applicable timelines under Federal Decree-Law No. 47 of 2022 on Corporate Tax and aims to provide clarity and relief to eligible taxpay- ers with specific tax periods.
Overview
This extension applies to taxable persons incorporated, established, or recognized in the UAE on or after 1 June 2023, with a short tax period ending on or before 29 February 2024. These entities now have until 31 December 2024 to submit their tax returns and settle any tax payable. However, this does not apply to entities whose tax periods end after 29 February 2024.
Key Changes and Implications
1- Extended Deadlines for Specific Tax Periods
Taxable persons with a short tax period ending on:
31 Dec 2023: The deadline is extended from 30 September 2024 to 31 December 2024.
31 Jan 2024: The deadline is extended from 31 October 2024 to 31 December 2024.
29 Feb 2024: The deadline is extended from 30 November 2024 to 31 December 2024.
2- Avoidance of Penalties
Administrative penalties, such as the AED 500 penalty for filing an incorrect tax return after the original deadline, will not apply if corrections are made before the new deadline of 31 December 2024.
3- No Impact on Later Tax Periods
For taxable persons with tax periods ending after 29 February 2024, the original deadlines remain unchanged (e.g., nine months after the tax period ends).
Detailed Examples
- Company A (Ras Al Khaimah): First tax period ends on 31 December 2023. Deadline extended to 31 December 2024.
- Company B (Abu Dhabi): First tax period ends on 31 May 2024. No change; the deadline re mains 28 February 2025.
- Company C (Ajman): First tax period ends on 31 January 2024. Deadline extended to 31 December 2024.
- Company D (Fujairah): First tax period ends on 29 February 2024. Deadline extended to 31 December 2024.
- Company E (Umm Al Quwain): First tax period ends on 31 December 2024. No change; the deadline remains 30 September 2025.
- Company F (Sharjah): Filed an incorrect tax return and corrected it before 31 December 2024. No penalty applies due to the extended deadline.
Guidance for Taxable Persons
Verify your tax period by consulting Public Clarification CTP003, which explains the first tax period of juridical persons.
Ensure all tax returns and payments are made by the new deadline to avoid penalties.
Conclusion
FTA Decision No. 7 of 2024 provides much-needed flexibility for newly established businesses with short tax periods. Taxable persons should review their financial periods and align their tax compliance activities with the extended deadlines to benefit from this relief.
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