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Modality for Change in Corporate Tax Period Announced!

FTA has announced Decision no 5 of 2023 on Conditions for Change in Tax Period for Corporate Tax

Corporate Tax Law

  • Taxable person is required to file corporate tax return for each Tax Period.
  • Tax Period can be the calendar year or the (12) twelve-month period for which financial statements are prepared.
  • An application for change of Tax Period can be made to the Federal Tax Authority (FTA), subject to following conditions which have been recently laid down.

Recent FTA decision – Conditions specified for change in Corporate Tax Period

Reason for change: Change in Tax Period can be requested only for one of the following reasons:
  • Upon liquidation
  • Aligning the financial year for following:
    1. Formation of Tax Group
    2. Joining an existing Tax Group
    3. Aligning Financial reporting with Group companies
    4. To avail specific tax relief under corporate tax Law in the UAE or foreign jurisdiction
  • There is a valid commercial, economic, or legal reason for a change
Change in Tax Period can be requested for following:
  • Extend the current Tax Period – Upto maximum of 18 months
  • Shorten the next Tax Period – Between 6 to 12 months
Application for change of Tax Period
  • Time lines – Within 6 months from the end of the original tax period
  • Additional condition – Application can be made only if Tax Return has not been filed for the respective Tax Period

MCA Comments

  • Change in Tax Period is allowed only for specified cases and for specified reasons
  • Change of Tax Period for valid commercial, economic or legal reason will cover vide range of aspects
  • Change of Tax Period for the purpose of formation of tax group or availing specific tax relief may not be subject to anti-abuse rule
  • Any decision for change of Tax Period should consider above conditions

Disclaimer: UAE Corporate Tax (CT) Law has been recently introduced. This is a summarised version of the CT law sections and it is advised to refer to the detailed law provisions prior to initiating any decisions.

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