Corporate tax expert underscores need for proper financial documentation

Businesses that fail to strategize their corporate tax approach will not only face financial burdens but risk non-compliance, warned Alia Noor, Associate Partner at Ahmad Alagbari Chartered Accountants. Making a presentation ‘A Golden Eye on UAE Corporate Tax: Optimization’, part of Gulf News’ event titled Invest UAE 2025, Noor provided an in-depth analysis of the UAE's evolving tax landscape.

“Knowledge is power; optimization is survival,” Noor emphasized. “If you don’t strategize, you fail; and you will not only pay taxes, but you will also pay penalties.”

Highlighting critical thresholds, Noor explained that businesses with annual taxable income up to AED 375,000 will enjoy 0%  corporate tax, while excess amount to this limit are subject to a 9% tax rate. Additionally, ‘natural person’ with total revenue in a Gregorian year exceeding AED 1 million must register by March 21, 2025.

Addressing free zone entities, Noor clarified that companies with Qualified Income will be subject to a 0% tax rate, while Non-Qualified Income will be taxed at 9%. She cautioned businesses not to be complacent, noting, “Don’t relax; FTA are changing Tax  period of many companies who  already registered for Corporate tax. That means the period might not always be 12 months; they could be 13 or even 14 months. You need to check the reporting timelines carefully.”

A key point in Noor’s discussion was the  Domestic Minimum top Up Tax (DMTT), implemented from 1st January 2025. This measure ensures that multinational corporations (MNCs) operating in the UAE with an effective tax rate below 15% will be subject to (DMTT) . “If your entity is part of a multinational group, and subject to top up tax you must register with the Federal Tax Authority (FTA). First filings are due within 15 months, though initial extensions up to 18 months are available,” she explained.

Tax deductions were another focal point. Noor stressed that not all expenses qualify for deductions, and businesses should distinguish between recoverable and non-recoverable expenses. “Mastering deductions is crucial,” she said. “Some expenses will save you money; others won’t. Personal expenses cannot be deducted, and companies must assess their eligibility carefully.”

She also highlighted the importance of compliance, advising that tax elections made during filings are mostly  irrevocable. Furthermore, she underscored the necessity of proper financial documentation. “Audited financial statements are mandatory for Qualifying Freezone persons even if their businesses are generating zero revenue. Failing to meet the conditions results in disqualification for the current and following four years.”

Noor concluded with a call to action: “Optimization is not optional. Either you survive, or you operate at a disadvantage.”