Learn About CT Payments and CT Refunds in the UAE

Most UAE businesses are still adjusting to corporate tax (CT) requirements. The law is new, and even minor errors in payment or refund claims can lead to enquiries. The rules seem technical, and missing a single deadline could mean fines or compliance issues.

Once you understand how CT payments and refunds work, the entire process becomes manageable. This guide breaks it down into simple terms so you can meet your obligations on time and claim refunds correctly when due.

You can also seek help in this matter from expert corporate tax agents in the UAE at Jitendra Chartered Accountants (JCA).

1. Understanding When to Pay Corporate Tax in the UAE

Every business registered under the UAE corporate tax law must settle its tax payment once a year. The payment must be made within nine months from the end of the business’s financial year. This means your payment deadline depends on your accounting year-end, not a fixed calendar date.

For example, if a company’s financial year ends on 30 June 2024, its CT payment must be made by 31 March 2025. Missing this date means the payment is considered late and may attract penalties.

There is no requirement for advance payments of CT in the UAE. Each business only needs to make one payment per tax period, along with submitting its CT return.

2. How the Authority Allocates Payments

If a company makes a payment without specifying what it is for, the Federal Tax Authority (FTA) decides how to use that payment. The FTA will always clear the oldest outstanding amount first.

If you pay more than what is owed, the extra amount is not lost. It becomes a credit balance, which can be adjusted against future tax dues. Alternatively, the business can apply for a refund if it prefers to receive the excess back.

Once the payment is processed, the FTA informs the taxpayer about how the money was allocated and what balance remains, if any.

3. Corporate Tax UAE: Payments in Bankruptcy Situations

When a company goes through bankruptcy proceedings, a trustee is appointed to handle the business’s tax matters. The trustee becomes the representative of the business for tax purposes.

The trustee must inform the FTA within 20 business days of their appointment. The FTA then informs the trustee about any taxes due and whether an audit will take place for past tax periods.

It is the trustee’s responsibility to ensure that all due corporate taxes and penalties are paid according to the rules of the UAE Tax Procedures Law.

4. Shared or Joint Business Liabilities

If two or more people are running a business that doesn’t have a separate legal identity, each of them is equally responsible for paying any due corporate tax and penalties.

In cases where a taxpayer passes away, the outstanding tax is first settled from the person’s estate before it is distributed among the heirs. If the tax liability appears later, it must be paid by the heirs according to their share of inheritance, unless the FTA has already issued a clearance certificate for the estate.

Any confusion? Seek assistance from professional corporate tax agents in Dubai.

5. When Can You Get a UAE Corporate Tax Refund?

Refunds are not automatic under the UAE CT law. A taxpayer must submit an application to the FTA to receive any refund.

Refunds are allowed in two main cases:

• When the withholding tax credit available to a taxpayer is higher than the CT payable.
• When the FTA determines that a taxpayer has paid more than the required amount, for instance, due to an overpayment.

However, a refund can be denied if there are other tax disputes or unpaid amounts linked to the same taxpayer. The FTA will only release the refund once those matters are cleared.

6. How the Refund Process Works

Once a refund application is submitted, the FTA reviews the request and then notifies the applicant whether it has been accepted or rejected.

If the refund claim is valid, the FTA must start the repayment process within five business days of approval. Before that, the FTA has 20 business days to assess the application and communicate its decision. If it needs more time, it will inform the taxpayer of the delay and the reason.

Refunds are always subject to conditions set under the Corporate Tax Law and the Tax Procedures Law. If a company has any pending tax returns when applying for a refund, the FTA can delay the refund until all missing returns are submitted. Once the records are complete, the excess amount becomes refundable.

Still muddled? Ask for more information from our qualified corporate tax agents in Dubai.

How can Jitendra Chartered Accountants help?

The UAE’s system is designed to be fair and transparent; once businesses understand how it works, paying and recovering corporate tax becomes a smooth and predictable process. However, assistance is still required, which is provided by JCA’s expert tax consultants and tax agents in the UAE. Once you have experts on backup, no opportunity will be missed.