Understanding the FTA’s Tax Return Guide

The FTA’s guide on Tax Returns issued in November 2024, comes at a time when the corporate tax return filing deadline (31 December 2024) is approaching. 

The guide assists taxpayers in understanding various schedules, exemptions, tax credits, and adjustments essential for accurate tax filings. 

In this article, we have attempted to provide an overview of the 176-page guide. 

Overview of a Tax Return

This section begins by highlighting the necessary details that taxable persons should provide, such as personal and business information. It includes sections on tax computation, tax period, and mandatory schedules. Documentation requirements are clearly defined to help taxpayers compile the needed information.

Taxable Person Details

Details regarding both natural and juridical persons are specified, including requirements for Free Zone entities, Unincorporated Partnerships, and Tax Groups. For instance, in case of a tax group, the taxpayer must fill in answers to questions whether the Taxable Person a member of a Multinational Enterprise Group and the TRN of the Unincorporated Partnership(s). The guide provides an understanding of the responses for such questions. 

Elections

The UAE Corporate Tax Law allows various tax benefits like the Business Restructuring Relief, Small Business Relief, and or relief for transfers within a Qualifying Group. However, it is imperative for the taxpayer to ‘elect’ for such reliefs. This section of the guide provides details about such election. 

There is a separate section in the guide providing details about the questions to be answered pertaining to the reliefs. For instance, whether the taxpayer needs to make any adjustments as a result of the application of the relief for transfers within a Qualifying Group?

Accounting Schedule

This schedule is part of the Tax Return for disclosure purposes only and does not result in any inputs into the computation of Taxable Income. It comprises of the income statement, statement of other comprehensive income, statement of financial position, and the audit report. 

Adjustments 

Here, the guide provides details of all the adjustments required to accounting income to arrive at the taxable income. These adjustments may be for items such as method of accounting, exempt income, foreign establishment exemptions or any other adjustments prescribed under the law. 

The guide also discusses other adjustments for non-deductible expenditure adjustments, interest expenditure, and related party transactions. 

Tax Liability and Tax Credits

The guide provides details of tax related sections in the form – viz. taxable income, tax losses, and tax credits.  It includes information on provisional figures, tax group losses, and how to apply foreign tax credits, offering a step-by-step approach for calculating final liabilities.

Schedules

There are separate schedules in the tax return for dividend, foreign permanent establishment, free zones, tax losses, participation exemption and limitation of interest. 

For instance, the purpose of the dividend schedule is to provide details of and calculate the total amount of dividends or other profit distributions to be deducted from accounting income for determining taxable income. 

Likewise the tax credits schedule must be completed if the taxpayer intends to claim a foreign tax credit. 

Conclusion

As the corporate tax return filing deadline comes closer, this guide serves as a useful reference for CFOs and tax return preparers to understand the expectations of the FTA while filling the tax return. 

Disclaimer: Content posted is for informational and knowledge sharing purposes only, and is not intended to be a substitute for professional advice related to tax, finance or accounting. The view/interpretation of the publisher is based on the available Law, guidelines and information. Each reader should take due professional care before you act after reading the contents of that article/post. No warranty whatsoever is made that any of the articles are accurate and is not intended to provide, and should not be relied on for tax or accounting advice