UAE corporate tax: what your books need before year-end

For most UAE companies the financial year ends on 31 December. The corporate tax return for that year is not due until nine months later, so for a December 2026 year-end the deadline is 30 September 2027. That makes it tempting to leave corporate tax until next summer.

The return, though, is built from your books. Under Article 20 of the Corporate Tax Law, taxable income starts from the accounting income in standalone financial statements, prepared under an accounting standard accepted in the UAE, and is then adjusted. If the books are not right on 31 December, every adjustment after that is reconstruction.

The Federal Tax Authority's reminder before the 30 September 2026 deadline, for years ended 31 December 2025, stressed one thing besides the date: keeping the documents that support every figure in the return. This is the checklist for getting your books there before the year closes, not after.

1. Use an accounting standard the FTA accepts

Ministerial Decision No. 114 of 2023 is short and specific:

• IFRS is the default.
• IFRS for SMEs may be used if your revenue does not exceed AED 50 million.
• Cash basis is allowed only if revenue does not exceed AED 3 million, or in exceptional circumstances on application to the FTA.

Above AED 3 million, that means accrual accounting: income when it is earned, expenses when they are incurred, with accruals, prepayments and depreciation in the books. The return itself asks which accounting basis you used (Article 53). A business that has run on bank statements plus a year-end adjustment from its accountant should move to accruals before this year closes.

2. Know now whether you need an audit

For tax periods starting on or after 1 January 2025, Ministerial Decision No. 84 of 2025 requires audited financial statements from:

• a taxable person, other than a tax group, with revenue over AED 50 million in the period, and
• every Qualifying Free Zone Person, whatever its revenue.

A tax group prepares audited special purpose financial statements instead. Under FTA Decision No. 7 of 2025, these aggregate the standalone statements of the parent and each member, eliminate transactions between members, and must reach the FTA within nine months of the period end.

If any of this applies to you, appoint the auditor before year-end. An auditor who arrives in March to a ledger nobody has reconciled is how a nine-month deadline becomes a tight one.

3. Separate what the law treats differently

Taxable income is accounting profit adjusted for the items the law treats differently. Those adjustments are simple when each item sits in its own account, and painful when it is buried in "general expenses". Before the year closes, make sure your chart of accounts keeps these apart:

The entertainment rule covers meals, accommodation, transport, admission fees and the facilities used to entertain business partners. A single "meals and travel" account therefore mixes fully deductible staff costs with half-deductible hospitality. Split it, and recode this year's entries before the books close.

4. Tag related parties and connected persons

Transactions with related parties must meet the arm's length standard under Article 34: the result has to match what unrelated parties would have agreed in similar circumstances. Payments to connected persons, meaning owners, directors and officers and their related parties, are deductible only to the extent they match market value and are incurred wholly and exclusively for the business (Article 36). Under Article 55 the FTA can require a disclosure of these transactions with your return, and supporting information within 30 days of asking.

All of that depends on being able to list the transactions. Mark related party and connected person customers, suppliers and expenses in the books as they happen: management fees, rent paid to an owner, loans between group companies, directors' pay. Do not plan on finding them in bank statements next August.

5. Keep every record for seven years

Article 56 requires a taxable person to keep all records that support the tax return, and that let the FTA readily work out taxable income, for seven years after the end of the tax period. The FTA's own summary lists records of transactions, assets bought and sold, liabilities and shareholdings.

The penalty for not keeping the required records is AED 10,000, or AED 20,000 for a repeat within 24 months (Cabinet Decision No. 75 of 2023, as amended). In practice, the invoice, bill, contract or receipt behind each entry should be attached to the entry itself, not left in someone's inbox. Seven years outlasts most finance teams.

6. Check your Small Business Relief position

Small Business Relief lets a resident taxable person elect to be treated as having no taxable income for a period, if its revenue for that period and every previous period is AED 3 million or less (Article 21, Ministerial Decision No. 73 of 2023). It was due to end with tax periods ending on 31 December 2026. Ministerial Decision No. 131 of 2026, issued on 29 July 2026, extends it to tax periods ending on or before 31 December 2029.

Three points matter for your books:

• Revenue is measured under the accounting standards. The threshold test is only as reliable as your revenue recognition.
• The test looks back. Once revenue exceeds AED 3 million in any period, you cannot elect the relief again.
• There are trade-offs and exclusions. Tax losses from a year in which you elect the relief cannot be carried forward, and Qualifying Free Zone Persons and members of multinational groups cannot elect at all.

The relief is an election, not an exemption from filing. The FTA was explicit that the September 2026 deadline applied to businesses eligible for Small Business Relief too.

For everyone else, the rate is 0% on the first AED 375,000 of taxable income and 9% above it (Article 3, Cabinet Decision No. 116 of 2022), and a tax loss carried forward can offset up to 75% of a later period's taxable income (Article 37). Both depend on figures your books have to support.

7. Close the year properly

Whatever your size, the basics decide how quickly the return comes together:

1. Reconcile every bank and card account to 31 December.
2. Agree receivables and payables, and deal with old balances.
3. Count stock and value it on the basis your accounting standard requires.
4. Update the fixed asset register and run depreciation.
5. Book accruals and prepayments, unless you qualify for cash basis.
6. Reconcile the revenue in your books to the revenue in the VAT returns filed for the year, and document the differences.
7. Lock the period once the figures are final.

Where Zoho Books fits

Most of the above is configuration, done once:

• Chart of accounts: separate accounts for entertainment, fines, donations and owner drawings, so the adjustments in section 3 come from a report instead of a project.
• Reporting tags: tag related party and connected person transactions at line level, across invoices, bills, expenses and journals.
• Attachments: the document behind each transaction stored with it, for the seven years Article 56 asks for.
• Fixed assets: an asset register that calculates depreciation.
• Transaction locking: once a period is closed, lock it, so nothing posted later changes the figures behind your return.

Zoho Books also has a Corporate Tax module for the UAE. Under Settings, Taxes, Corporate Tax you enter your corporate tax registration number and choose the accounts used to calculate the tax. It then generates the return figures for the year and records the payment. You still file the return in EmaraTax and mark it as filed in Zoho Books, and the module is available on the Professional plan and above.

Because it calculates from the accounts you choose, the chart of accounts has to be right first. That is the part of our Zoho Books implementation work that matters most for corporate tax. It pays off twice: the same clean customer and item records are what UAE eInvoicing will validate on every invoice.

Before 31 December

If your financial year ends on 31 December 2026, the return is due on 30 September 2027. Filing late costs AED 500 a month for the first twelve months and AED 1,000 a month after that (Cabinet Decision No. 75 of 2023, as amended). But the real cost of leaving it is different: every rule above is easier to apply in December than to reconstruct the following summer.

If you want to know whether your books are ready, book a free consultation. We will review your chart of accounts, accounting basis and related party setup in Zoho Books with you, and show you what to fix before year-end.

Official sources

• Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, and its amendments, Ministry of Finance consolidated version
• Ministerial Decision No. 114 of 2023 on Accounting Standards and Methods
• Ministerial Decision No. 84 of 2025 on Audited Financial Statements
• Federal Tax Authority Decision No. 7 of 2025 on Audited Special Purpose Financial Statements for a Tax Group
• Ministerial Decision No. 73 of 2023 on Small Business Relief
• Ministerial Decision No. 131 of 2026 extending Small Business Relief
• Cabinet Decision No. 116 of 2022 on the annual Taxable Income subject to Corporate Tax
• Cabinet Decision No. 75 of 2023 on Administrative Penalties, and its amendments
• FTA: 30 September 2026 deadline for filing Corporate Tax returns (26 September 2026)
• FTA: retaining Corporate Tax records (27 August 2025)
• Zoho Books, Corporate Tax help for the UAE (Zoho)