The first full cycle of UAE corporate tax filings is now behind most taxpayers. The federal regime, introduced for financial years beginning on or after 1 June 2023, is no longer new. And yet, heading into year two, a small cluster of recurring missteps is surfacing in nearly every engagement we review. They are not exotic positions — they are ordinary administrative questions that were answered quickly under deadline pressure, and rarely revisited since.
This note sets out the five that we see most often. It is not a substitute for written advice on your own facts, but it may save a conversation.
1. Treating the initial registration as final
The Federal Tax Authority's registration form captures a snapshot: licence, activity, financial year, ownership, authorised signatories. Many companies registered in mid-2023 and have not touched the record since. In the intervening period, they have opened new branches, added shareholders, changed auditors, or moved accounting software. None of this flows automatically to the FTA.
The law requires the taxpayer to keep their registration details current. When the FTA eventually asks for them — and in compliance notices this year, it has started to — a stale record is the first thing auditors notice.
What to do
Before your second return, compare the FTA record against your current trade licence, MOA and signatory list. File updates where they diverge. Treat this as a five-minute housekeeping task, not a project.
2. Assuming free zone status carries across the group
A Qualifying Free Zone Person (QFZP) is assessed entity by entity. If your group has a free zone holding company and a mainland operating subsidiary, the holding company's 0% position does not cascade to the subsidiary. Equally, the subsidiary's 9% position does not contaminate the holding company — provided substance, qualifying income and de minimis tests are met at each level.
What goes wrong, in year two, is internal services. A mainland entity invoicing the free zone entity for back-office support can disturb the free zone entity's qualifying income calculation if the charge is not correctly categorised. Equally, the mainland entity may be overstating its deductible expenses by not recognising the related-party nature of the charge.
Free zone analysis is not a one-time exercise. It is an annual assessment, and each year's facts are tested on their own.
3. Ignoring related-party balances until audit
Shareholder current accounts, intercompany loans, director balances — these are the line items most commonly flagged in UAE audits, and they are now also the line items most likely to attract tax authority attention. The position is straightforward: related-party transactions must be conducted at arm's length, and material balances attract transfer pricing documentation obligations.
What we see is the opposite: interest-free shareholder loans of significant size, undocumented management fees, and intercompany charges booked without a services agreement. Each is defensible if properly supported. None is defensible on the basis of "we've always done it this way".
What to do
Identify every related-party balance on the trial balance. For each one, confirm: is there a written agreement, is there a commercial rationale, and is the pricing supportable? If the answer to any is "no", fix it before the return, not after.
4. Misclassifying the accounting period
A surprising share of second-year returns are being prepared against the wrong financial year. This happens most often in groups with mixed year-ends, or in companies that changed year-end at some point since incorporation. The CT period follows the financial period used for accounting purposes — not the calendar year, not the trade licence anniversary, not the shareholder's preference.
Getting this wrong compounds every downstream figure: the opening balance of retained earnings, the prior-year comparatives, the small business relief threshold test. It is worth the ten minutes to reconcile once.
5. Leaving the transfer pricing disclosure blank
The transfer pricing disclosure form, filed with the return, is not optional for in-scope taxpayers. It is also not a substitute for transfer pricing documentation — the disclosure summarises, it does not prove. Groups that exceed the thresholds for a local file or master file must have those documents prepared and available, regardless of whether the FTA has asked for them.
The common error is to leave the disclosure blank, on the grounds that "we have no material transactions". This is a factual statement, and it must be true. If it is not true, the penalty is disproportionate to the effort of filing correctly.
The point behind the list
Corporate tax is a new discipline for the UAE, and the first cycle was always going to be dominated by registration, scope, and filing mechanics. In year two, the focus shifts. The FTA is now in a position to compare filings against public register data, trade licence activity, and audit reports. Inconsistencies that went unremarked in 2024 will not remain so in 2026.
None of the issues above are difficult to fix. They just require being surfaced before a deadline, not during one.