Introduction

The inaugural corporate tax compliance cycle in the United Arab Emirates (UAE), concluding on 30 September 2025, has been a defining moment for UAE-based entities, revealing both opportunities and challenges as they adapt to the new regulatory framework. The release of the UAE Corporate Tax Law (Law) on 9 December 2022 marked a transformative shift in the region's tax landscape. With the Law effective from financial years starting on or after 1 June 2023, 30 September 2025 was the first filing deadline for most businesses.

The UAE tax authorities have provided guidance through Cabinet Decisions, Corporate Tax Guides, Public Clarifications and a user-friendly EmaraTax platform, which supported taxpayers and professionals during this transition.

Detailed discussion

Some key insights gained from the first corporate tax filing are set out below.

Recordkeeping and data readiness

Incomplete reconciliations and delayed audits posed hurdles for many. Businesses must prioritize robust accounting processes, timely audits and alignment of financial systems with corporate tax compliance needs. Disclosure readiness — such as the Tax Reference Number for dividend income and related-party details — should be embedded early in the reporting cycle.

Financial statement disclosures

Accurate and comprehensive financial statement disclosures are critical to support the corporate tax return. As the financial statements are a key data source for verifying the details submitted in the corporate tax return, taxpayers should ensure that information and details submitted in the return are aligned with the financial statements. These details include: corporate information for the entity, the nature of the business activities, significant accounting policies, a list of related parties, related-party transactions, details of significant transactions during the tax period, details of immovable properties and tax-sensitive adjustments. Now that the Corporate Tax Law has been enacted in the UAE, taxpayers should revisit their disclosure and financial information in the financial statements.

First-year irrevocable elections

Irrevocable elections (e.g., realization basis and transitional relief) required careful analysis. Many missed strategic opportunities due to rushed or uninformed decisions. New entities should proactively assess these elections to improve long-term tax positions.

EmaraTax account hygiene

A periodic health check of the EmaraTax account is essential to confirm that entity details are accurate and aligned with the business profile, as these are auto populated in the corporate tax return. This includes verifying and updating registration information, authorized signatories, business activities and charter documents. Particular attention should be given to foreign entities, for which the entity type or trade license details may not be reflected correctly in the system. Maintaining an updated EmaraTax profile can help prevent administrative issues and support compliance with corporate tax requirements.

Transfer pricing documentation

Transfer pricing emerged as a key challenge. Businesses must establish frameworks aligned with Organisation for Economic Co-operation and Development (OECD) principles and maintain contemporaneous documentation to help reduce tax audit risks.

Adapting to evolving guidance

The assessment of tax technical positions is an ongoing process, especially in light of recent public clarifications and retrospective decisions issued by the Federal Tax Authority (FTA), and should be considered when finalizing the corporate tax return. If these updates were not considered in the corporate tax return, taxpayers should assess their impact and determine appropriate remedial actions, including the possibility of opting for voluntary disclosure. Regular engagement with tax advisors and, where relevant, obtaining private clarifications for uncertain tax positions, can help facilitate continued compliance and accuracy in filings.

Securing Qualifying Free Zone Person (QFZP) relief

Several taxpayers were unable to benefit from QFZP relief due to noncompliance with certain conditions stemming from internal process gaps. Notably, this relief may not be claimed in the subsequent four tax periods if the first tax return is filed as being subject to tax at a rate of 9%. Newly incorporated taxpayers should adhere diligently with eligibility requirements and claim the relief in the first corporate tax return. Taxpayers who have already opted for the relief must ensure continued compliance with all prescribed conditions throughout subsequent tax periods.

Corporate tax group formation

Restructuring to meet the conditions to form a corporate tax group requires strategic planning. Many businesses undertook restructuring during the first tax period to form a corporate tax group from the second tax period onward. It is crucial to evaluate the tax implications of such restructuring, including the treatment of pre-grouping tax losses, interest deductions and other relevant items in the group computation. Elections made at the entity level in the first corporate tax return, such as election of the realization basis of taxation, transitional relief and qualifying group relief should be reviewed for alignment at the consolidated group level once the corporate tax group is formed.

Streamlining corporate structures

Dormant entities outside tax groups increase compliance burdens. If these entities are not part of a tax group, liquidation may be considered to reduce ongoing compliance obligations. Deregistration applications for entities proposed for liquidation should be submitted within the prescribed timelines, accompanied by the final corporate tax return, to facilitate a smooth and compliant exit process.

Early filing and payment efficiency

To avoid last-minute payment issues on the EmaraTax portal, including late payments being reflected, early filing is encouraged. This can allow sufficient time to verify payment details, resolve discrepancies with the FTA and avoid potential interest or penalties. Timely action and proper documentation support a smoother compliance experience.

Key takeaways

The first corporate tax cycle highlighted the importance of robust and integrated accounting and reporting systems, as well as strong governance. Reliance on manual reconciliations and disparate data sources led to inefficiencies for some during the filing process. Automating tax data mapping and embedding compliance controls within Enterprise Resource Planning (ERP) systems can significantly enhance accuracy and streamline reporting. In parallel, implementing a clearly defined tax governance framework can reduce compliance risks and enhance confidence among management and stakeholders.

As businesses move into the second year of corporate tax compliance, early planning, robust data management and continuous monitoring of tax developments will be key to enabling accuracy, efficiency and sustained compliance with the UAE corporate tax regime.

As the FTA begins issuing review questionnaires via email, early preparation of supporting documentation and working papers will be crucial. Businesses must demonstrate the strength of their compliance frameworks to facilitate timely and effective responses. Therefore, taxpayers should proactively gather the relevant supporting documentation, working papers and underlying data to provide timely, accurate and comprehensive responses to any information requests. Early preparation will help facilitate an efficient FTA review process and demonstrate the robustness of the taxpayer's compliance framework.