UAE Corporate Tax: Businesses hit with fee hikes from auditors

Dubai: UAE businesses still in a last-minute dash to prepare their tax returns are getting hit with significant fees hikes from auditors taking on these projects.

“There is no blanket rate charged by auditors, but we are seeing rate variations from Dh3,000 to as high as Dh20,000 on a company to company basis,” said an industry source. “Due to last-minute filing requirements, costs have actually gone up for businesses.

“Since this is the first time filing of corporate tax returns, companies are depending on tax consultants and auditors to do the job.”

That’s why many of them are seeing sizable fee hikes. And for many of the smaller businesses, these are expenses they can scarcely afford to spend on.

For UAE companies that have their financial years running from January to December, end September automatically became the deadline for tax return submissions.

The FTA (Federal Tax Authority) has issued multiple directives to ensure that no one misses the deadline. Earlier, the FTA had even given Dh10,000 penalty waivers for businesses that had failed to register for UAE’s corporate tax on time.

There is also another trend that’s showing on the UAE tax landscape. Companies that were until now into tax advisory and compliance services are upgrading to offer audit services too.

“Many companies are not willing to take chances with their first tax filing – with good reasons,” said Sumayya Zain, founder of Hallmark International Auditors.  

“Instead, they are outsourcing the work. Some tax consultancies have brought in additional resources to handle the workload.

“The situation has become challenging because many UAE businesses waited until the last minute to finalize financial statements, plan for tax, and prepare for filing.”

According to the FTA, businesses must pay the corporate tax within a period not exceeding 9 months from the end of the Tax Period for each registrant.

“Filing tax returns and paying taxes owed by tax payers is a fundamental legal obligation that must be fulfilled to ensure compliance with tax legislation and avoid fines for non-filing and delays,” the FTA has said.

Once the first tax returns and payments are done, businesses need to maintain all records supporting the info provided in their returns. Or any other document required to be submitted to the FTA. )These records enable the FTA to verify the business’s taxable income for corporate tax purposes.)

Of equal importance is a record of assets (including details of any purchases or disposals of assets), a record of liabilities, and a record of any shares held at the end of the tax period.

“As the September filing deadline approaches, demand for auditing is rising - driven by companies above the Dh50 million turnover, tax groups, free zone firms seeking to preserve their 0% status, and businesses with bank financing,” said Jayan Balakrishnan, Principal Consultant and Managing Director, APT Management Consultancy.

“Audit fees have increased by 10%–20% as auditors factor in new compliance, IFRS standards, and transfer pricing checks.

“At the same time, some companies see this as an opportunity to strengthen their books. The real pressure is on larger corporates and free zone companies, while smaller businesses remain cautious.”