Corporate Tax Filing in 2025: What Has Changed Since the First Year of Implementation

As the UAE enters the second full year of its corporate tax regime, 2025 represents a key milestone for businesses operating across the Emirates. Many companies are now approaching their first complete tax filing cycle following the introduction of the Corporate Tax Law in June 2023.

The Federal Tax Authority (FTA) has issued several updates and clarifications that reshape how entities must prepare and submit their tax returns. These adjustments aim to improve transparency, strengthen compliance, and align the UAE’s tax landscape with international standards.

Refined Rules on Taxable Income and Documentation

In 2025, the FTA has placed greater emphasis on the documentation and accuracy of taxable income. Businesses must maintain detailed records supporting their financial statements and ensure consistency between accounting and tax reporting.

Transfer pricing remains a key focus area. Companies engaged in intra-group transactions must maintain proper transfer pricing documentation, including both local and master files. Restrictions on deductible expenses, especially entertainment, interest, and depreciation, are now being more strictly applied.

Free Zone Entities Under Closer Scrutiny

Free Zone companies benefiting from 0% corporate tax must now demonstrate that their income qualifies under the “Qualifying Income” framework. The FTA has clarified that the preferential rate is not automatic; it requires both genuine economic substance and active operations within the UAE.

Entities that fail to meet these criteria risk losing their eligibility for the 0% rate, making internal compliance reviews increasingly essential.

Filing and Reporting Requirements

Corporate tax returns must be submitted electronically through the FTA portal. Entities with annual revenues exceeding AED 50 million are now required to submit audited financial statements alongside their filings.

Additional disclosures are also expected, including details on exempt income, losses carried forward, and group relief claims. For most companies with financial years ending in December 2024, the first filing deadline will fall around mid-2025.

Penalties and Compliance Risks

The FTA has implemented a new penalty framework effective from 2025. Businesses face fines starting from AED 500 per month for late filing, increasing up to 12 months.

Failure to maintain proper accounting records can result in penalties between AED 10,000 and AED 20,000. Incorrect or incomplete filings that lead to underpayment of tax may incur additional penalties ranging from 2% to 4% of the unpaid amount.

Even small-business relief beneficiaries must still file annual tax returns, even if no tax is payable.

Strengthening Governance and Compliance

With the UAE’s corporate tax framework now fully operational, companies are encouraged to adopt proactive compliance strategies. Reviewing corporate structures, ensuring adequate substance, and conducting regular internal audits are now key to maintaining tax efficiency and avoiding penalties.

Businesses planning expansion in 2025 should also consider restructuring opportunities that optimise their tax exposure while remaining compliant with FTA regulations.

Bolster’s Expertise in Corporate Tax Advisory

Bolster supports international entrepreneurs and SMEs in navigating the UAE’s evolving corporate tax landscape.

Our services include registration, filing, accounting coordination, and strategic tax planning for both Mainland and Free Zone entities.

To ensure your 2025 corporate tax filing is compliant and optimised, contact Bolster Group at contact@bolster-group.com.