How to File Business Taxes for Small Businesses

Starting a small business comes with various responsibilities, and one of the major responsibilities is understanding your tax obligations. As a small business owner in the UAE, it’s essential to familiarise yourself with the corporate tax system, which is still relatively new but critical for compliance. Unlike many other countries, the UAE’s tax system has undergone significant changes in recent years, introducing corporate taxes and VAT, but it also offers attractive benefits such as tax exemptions for small businesses and free zone companies.

If you’ve recently launched your small business, figuring out how to comply with the Federal Tax Authority (FTA) regulations might feel overwhelming.   Instead of stressing over it, this article provides a simple yet complete guide to help you file your small business taxes with ease. 

In this guide, we’ll break down the essentials in simple terms and walk you through the process step-by-step. Let’s start by understanding the basics of small business taxes, how to file business taxes, and the UAE corporate tax system.

Understanding the UAE Corporate Tax System

The UAE corporate Tax system is a territorial tax system, taxing businesses on the profit they make on their UAE-sourced income. So if your business earns money, a portion of that profit is subject to this tax. 

To whom does it apply?

All companies work in the UAE. This covers:

• Mainland businesses: Companies operating within the regular business areas of the UAE.
• Free Zone businesses that meet specific conditions may benefit from a 0% Corporate Tax rate on qualifying income. However, income from activities conducted with the UAE mainland or non-qualifying activities may be subject to the standard 9% rate.
• Natural persons conducting business activities in the UAE must register for Corporate Tax if their annual turnover exceeds AED 1 million.
• Foreign firms whose source of income is derived from within the UAE.

What’s the Tax Structure?

The UAE uses a tiered system:

• 0%: You pay no corporate tax if your business profits are AED 375,000 or less per year. This helps smaller businesses.
• 9%: If your profits are more than AED 375,000, you'll pay 9% on the amount exceeding that threshold.
• 15%: Large multinational corporations that meet specific global revenue thresholds will be taxed at 15%. This is to align with international tax standards.

The United Arab Emirates&' corporate tax is meant to be reasonable and competitive, with provisions to help small businesses and guarantee that big ones pay their fair share.

Now, before you file business taxes, it’s important to prepare for tax filing. 

Also Read: UAE’s Corporate Tax: A primer on navigating the new regulations.

Gather Your Business Records

Before filing taxes, you must have all your business records in hand. This requires accurate bookkeeping. Maintaining financial records through accurate bookkeeping helps in compliance and provides a clear and reliable picture of your business's financial health. 

Nevertheless, for tax filing, you will need different things based on the type of business entity, but start by gathering the following: 

• Last year’s tax returns
• Personal information (address, DOB, etc.)
• Your UAE Business Tax Registration Number (TRN) (for Corporate Tax purposes)
• Financial statements (balance sheet and income statement)
• receipts and expenses
• Payroll Records(If applicable)

Step-by-Step Guide: How to File Your Business Taxes

Whether you are filing your business tax for the first time or you want a simplified, smooth tax filing experience, here’s a step-by-step guide to filing federal income taxes: 

1. Prepare Your Books for Tax Season

We have already discussed the essential documents you require to file your taxes. In addition, you must prepare your books for the current tax season. Accurate and updated bookkeeping is probably the most important step for stress-free tax filing. 

Bookkeeping is the hardest part, and it takes a lot of time. Starting from January 1, try to record and categorise every single business transaction. For this, you can use accounting software or spreadsheets. 

But remember to record the amount, what category it falls under, the date of the transaction, and a short description of the transaction details.  

After listing and categorising your records, you must reconcile them with your bank accounts. A reconciliation helps you accurately match your internal records with bank and credit card statements.

Once reconciliation is done, summarise all those transactions in a balance sheet and income statement to file your taxes. 

(Remember to keep a detailed account of how you spend money on your business. You can do this by collecting receipts and invoices for all your business transactions.)

2. Find The Right Tax Form For Your Business Structure

Now that you have sorted your recordkeeping, it’s time to find the right tax form for your business. Generally, the UAE has a federal Corporate Tax regime that applies across all emirates, and unlike the US system, there aren't a wide variety of different tax forms based on the structure of the company.

While the form remains mostly the same, the key factors that affect a business's tax obligations are:

• Legal Entity: Whether it's a mainland company, a free zone entity, or another legal form.
• Business Activity: The type of business activities conducted.
• Free Zone Status: If applicable, whether the business qualifies as a "qualifying free zone person" and if they conduct business with the mainland.
• Revenue: the amount of taxable income, as the tax rate changes after 375,000 AED.
• Multinational Company Status: If the company meets the criteria to be taxed under pillar 2 of the OECD base erosion and profit changing rules.

3. File Your Taxes

With your financial records organised and the appropriate information gathered, you're ready to file your UAE Corporate Tax (CT) return. Follow the guidelines provided by the Federal Tax Authority (FTA) on their online portal for accurate reporting of your taxable income and adherence to all compliance requirements. 

Here’s how to file business taxes or corporate taxes (CT) in the UAE: 

• Get a Tax Registration Number (TRN) from the FTA through the EmaraTax portal and obtain a valid trade license. 
• Calculate your business's net profit or loss for the financial year and deduct the allowable expenses and adjustments accordingly. 
• Fill out the corporate tax return form relevant to your business.
• Submit the form online through FTA’s e-service portal.
• Pay any taxes that are due before the deadline. 

UAE Corporate Tax (CT) Registration Deadlines:

Important Notes:

• These deadlines apply to “registration” for Corporate Tax, not the filing of tax returns or payment deadlines.
• Always consult the official Federal Tax Authority (FTA) website for the most current and accurate information.

Common Mistakes Small Businesses Have To Avoid While Filing Taxes In the UAE

When it comes to filing taxes in the UAE, especially with the introduction of the Corporate Tax (CT), small businesses should be careful to avoid common mistakes. 

Below are some common mistakes to watch out for:

1. Inaccurate Bookkeeping

If financial records are incomplete or wrong, it can cause wrong tax estimates and possibly overpayment, underpayment, or audits. To avoid this, record every transaction precisely, organise expenses correctly, and regularly reconcile bank records.

2. Improper Expense Categorisation

Mixing personal and business expenses or misclassifying deductions can lead to severe difficulties. Understand which expenses qualify under UAE CT legislation and are deductible, and maintain personal and commercial expenses separately. 

3. Missing Registration and Filing Deadlines

Failing to register for CT or missing filing deadlines can lead to penalties.   

Stay informed about deadlines, set reminders, and sign up quickly. 

4. Misjudging Tax Liabilities

Incorrectly calculating taxable income can result in significant financial consequences. To avoid this, seek professional tax advice and conduct regular reviews of your tax liabilities.

5. Missing Out on Tax Incentives

Small businesses overlook eligible tax reliefs or incentives, leading to higher tax payments. Always stay updated on CT regulations and consult with a tax advisor to identify applicable incentives.

6. Failure to understand Free Zone rules

Many businesses are in free zones and fail to understand the rules regarding mainland business. Fully understand the rules regarding free zone entities, and ensure that you correctly report those earnings if you conduct mainland business.

How Alaan Supports Small Businesses with Tax Filing and Compliance

Filing business taxes in the UAE can be a complex process, especially for small businesses juggling limited resources and growing compliance obligations. That’s where tools like Alaan can make a meaningful difference.

While Alaan isn’t a tax filing platform, it plays a vital role in simplifying the financial operations that underpin successful tax compliance. From managing day-to-day expenses to preparing accurate records for corporate tax returns, Alaan provides smart automation that reduces the risk of human error and supports better decision-making.

With Alaan, small businesses can:

• Track and categorise expenses automatically, helping you ensure that all deductible business costs are accounted for, without manual entry.
• Set spending limits by team or category so you remain within budget and avoid overspending before filing season.

• Access real-time dashboards, which give you full visibility into your business’s financial health and simplify reconciliation and reporting.
• Export clean, audit-ready reports, which can be easily shared with your accountant or uploaded to your FTA filings when needed.

Alaan integrates seamlessly with your accounting workflows, ensuring that your financial data is up to date and aligned with corporate tax requirements, especially when deadlines approach.

Conclusion

Navigating corporate tax requirements is now an essential part of running a business in the UAE. For small business owners, understanding when to register, how to prepare accurate records, and how to avoid common filing mistakes can make all the difference in avoiding penalties and staying financially healthy.

Tax season doesn't have to be overwhelming. By keeping your books in order, staying aware of deadlines, and adopting tools that reduce manual work and boost accuracy, you can turn tax compliance from a burden into a streamlined part of your operations.

At Alaan, we’re committed to helping small businesses simplify expense management, stay organised, and maintain financial compliance, all year round. If you’re ready to take control of your business spend and make tax time stress-free, get started with Alaan today.