1. Losing QFZP Status Due to De Minimis Breach 

Why this happens:  

Many Free Zone companies mistakenly believe a small amount of mainland income won’t hurt. But if more than 5% or AED 5 Million of your total revenue comes from non-qualifying sources, you lose your QFZP status not just for one year, but for five. 

How to stay compliant with UAE corporate tax rules: 

• Track qualifying vs. non-qualifying income monthly. 

• Maintain separate ledgers for both. 

• Ask your accountant to review quarterly. 

• Stay under 5% or AED 5 million, whichever is lower. 

A small slip here can wipe out your 0% tax benefits for years. Prevention is much easier than recovery. 

2. Missing the Corporate Tax Registration Deadline 

Why this happens: 

Businesses often miss the FTA-assigned registration deadlines because they don't realize the date is based on license issuance month, not revenue or activity. 

How to stay compliant with CT requirements in the UAE: 

• Check your license issuance date today. 

• Refer to the FTA’s registration deadline chart. 

• Register via EmaraTax before your specific deadline. 

• Use calendar reminders to stay ahead of key dates. 

A simple oversight here leads to a completely avoidable CT mistake in the UAE and a guaranteed fine.  

3. Assuming You’re Exempt Without Filing 

Why this happens:  Founders earning under AED 375,000 often assume they don’t need to register or file. But unless you formally opt for Small Business Relief, you don’t get it. 

How to avoid this CT mistake in the UAE: 

• Register on EmaraTax, even if income is below the threshold. 

• Tick the SBR option when submitting your return. 

• Confirm your total revenue is under AED 3 million. 

• File your return even if the tax payable is zero. 

Too many founders get tripped up by this simple CT mistake in the UAE and miss out on the relief they deserve. Don’t be one of them. 

4. Misunderstanding Free Zone Qualifying Criteria 

Why this happens:  Many assume that Free Zone = 0% tax by default. In reality, only those conducting qualifying activities and meeting economic substance requirements qualify. 

How to stay compliant: 

• Review Cabinet Decision No. 100 of 2023. 

• Check if your business activity is on the qualifying list. 

• Avoid unapproved mainland transactions or isolate them correctly. 

Many businesses lose tax benefits because they don’t fully understand what being a Qualifying Free Zone Person (QFZP) requires. 

5. Filing With Incomplete or Inaccurate Financials 

Why this happens:  Some businesses rely on rough estimates, outdated spreadsheets, or unverified numbers. This opens the door to audits or worse, loss of QFZP status. 

How to avoid this costly CT mistake in the UAE: 

• Use founder-friendly accounting software like Kitaab, Zoho Books or QuickBooks. 

• Reconcile bank statements monthly. 

• Hire a qualified accountant to review your financials. 

• Submit audited statements if revenue exceeds AED 50 million. 

Sloppy numbers lead to serious consequences. Clean books protect your status and your peace of mind. 

6. Overlooking Transfer Pricing (TP) Rules 

Why this happens: 

Family-run or group businesses often ignore related-party transaction rules, assuming they only apply to large corporations. 

How to stay compliant: 

• Identify all related-party transactions, even with family or shareholders. 

• Maintain a Local File (and a Master File, if required). 

• Price all transactions at arm’s length. 

• Even if you're eligible for simplified TP rules, keep documentation ready. 

This is one of the more technical CT mistake in the UAE, and one that often gets flagged during audits. 

7. Late Filing of Corporate Tax Returns 

Why this happens:  Some businesses confuse registration with compliance. But once registered, you must file within 9 months of your financial year-end. 

Avoiding This Common CT mistake in the UAE: 

• Know your financial year-end and the return deadline. 

• Start preparing at least 3 months early. 

• File your return on EmaraTax on time. 

• Plan for advance payments if your business grows. 

Filing late means instant penalties is one of the most overlooked CT mistake in the UAE. Mark your calendar and plan ahead. 

If you’re unsure whether your business ticks all the right boxes, now’s the time to act. 

Whether it’s de minimis thresholds, qualifying activities, transfer pricing, or proper bookkeeping, UAE corporate tax rules demand more than surface-level understanding. They require clarity, precision, and a tailored approach to your business structure. 

At Kitaab, we help founders and finance teams stay one step ahead so you can file accurately, claim what you're entitled to, and focus on growth without worrying about compliance slip-ups or penalties. 

Book a consultation with Kitaab today and take the guesswork out of corporate tax compliance.