KISA Chartered Accountants (KISA) Managing Partner cautions that typical mistakes and omissions might result in reviews and fines from the Federal Tax Authority after the September 30 deadline has passed, as UAE firms prepare their financial statements for corporate tax filings.
Businesses in the UAE are facing their first-ever corporate tax deadline, and time is running out. Even if a lot of businesses have registered and are getting ready to file, there is a risky market assumption that completing the return marks the end of the process. It’s only the beginning.
That’s what Nikos Kastellanis, managing partner of KISA, one of the top DFSA-registered auditors in the UAE, has to say. In the United Arab Emirates, KISA offers audit, tax, and consultancy services to both regulated and non-regulated organisations.
Why mistakes in the first year are most dangerous
With its new business tax system, the UAE is negotiating unknown territory. The Federal Tax Authority (FTA) will review this year’s reports without any prior-year standards, in contrast to mature markets where past filings serve as a baseline. This is the first time every tax position is being examined, which will be closely examined.
First-year tax errors are widespread worldwide. Companies ignore Permanent Establishment duties, exaggerate deductions, or misclassify costs. Related-party transactions, typical in global corporations, are often priced differently or have inadequate documentation. Many businesses exaggerate losses without providing enough evidence.
According to the OECD’s Tax Administration 2022 study, audit rates increase within two years in countries implementing corporation tax for the first time because tax authorities build confidence early.
The FTA has taken a proactive approach to enforcement by publishing comprehensive guidelines, frequently asked questions, and explanations. Kastellanis states, “The Federal Tax Authority has already made their expectations clear, so they don’t need to say much more.” Enforcement comes next.
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