How We Helped a Free Zone Company Avoid AED 100,000+ in Unjustified Corporate Tax
An IP holding company is a mid-sized business of 50 – 100 employees, operating in the free zone and specializing in intellectual property and patent management.
The Challenge
Corporate Tax Liability Reversal for a Free Zone IP Holding Company
This free zone company has only one registered patent that fulfilled all six conditions to be qualified as a Qualifying Free Zone Person according to Corporate Tax Law and hence was subject to the 0% rate.
However, despite using the services of one of the largest tax and audit firms in the UAE for the filing process, the return was prepared incorrectly and inaccurately, in a manner that implied Corporate Tax application, instead of the qualifying 0% rate. This manner left the client with a liability of over AED 100,000 in the current period and the same in the following four periods.
Company Type:
Intellectual Property & Patent Holding
CT Eligibil:
Qualifying Free Zone Person — 0% Rate
Company Size:
50–100 Employees
Qualifying Conditions:
All 6 statutory conditions — fully met
Our Solution
A Systematic 4-Step Correction Plan
Once they contact us, we provide a free consultation, discussing the problem and the whole situation. ABT’s team of tax agents and tax advisors analyzed in full the operations of the client, their supporting documents and tax compliance history, and determined that all the six qualifying conditions were met. Then we have developed an urgent plan for correction before the upcoming deadlines as follows:
Accurate Audited Financial Statements Prepared
Accurately prepared audited financial statements by our FTA-registered audit team.
Original Corporate Tax Return Revised & Corrected
Revised and corrected the earlier submitted Corporate Tax Return.
Amendment Process Initiated Before FTA Deadline
Initiated the process of the amendments before the applicable deadlines of the FTA expired.
Voluntary Disclosure Provisions Applied
Utilized the provision of voluntary disclosure available according to the Corporate Tax Law, allowing the correction of the tax return even after expiration of the initial deadline.
However, mid-way through the correction process there was a technical issue with the FTA portal due to which the amendments that we dad successfully submitted multiple times were not reflected in the back-end side of the system. Therefore, rather than waiting for the resolution of the system, we have contacted the technical support of the FTA using the formal communication channels.
The Result
Liability Reversed Free Zone Status Secured
However, mid-way through the correction process there was a technical issue with the FTA portal due to which the amendments that we dad successfully submitted multiple times were not reflected in the back-end side of the system. Therefore, rather than waiting for the resolution of the system, we have contacted the technical support of the FTA using the formal communication channels.
Get a Free Consultation With Our Corporate Tax Experts
Whether your filing may be inaccurate, you’ve received an FTA query, or you simply want to verify your Free Zone CT status — our certified team will review your situation at no cost.