Guides · financial-year
Financial year
The financial year of a UAE company is determined by the Commercial Companies Law. The first financial year starts on the date of registration and can be between 6 and 18 months. Subsequent financial years are 12 months (or within 5 business days of 12 months). For Corporate Tax, the Tax Period is the financial year or part thereof. The first Tax Period for a company incorporated on or after 1 June 2023 is its first financial year; if incorporated before that date, the first Tax Period is the first 12-month financial year starting on or after 1 June 2023. Companies can apply to change their financial year, subject to conditions, and must align with Corporate Tax requirements.
Dates that carry a penalty
File Corporate Tax Return and pay any Corporate Tax dueWithin 9 months from the end of the Tax Periodsource
Apply to FTA for change of Tax PeriodWithin 6 months from the end of the original Tax Periodsource
Submit Tax Deregistration application after cessation of businessWithin 3 months from the Deregistration triggering eventsource
Who it applies to
All UAE onshore and free zone companies (juridical persons) incorporated under the Commercial Companies Law
Branches of foreign companies registered in the UAE
Non-resident persons with a Permanent Establishment in the UAE
The rules that decide it
First financial year durationsource
The first financial year of a company starts on the day it is registered and must be at least 6 months and not longer than 18 months.
Subsequent financial yearssource
The second and any subsequent financial year will start at the end of the previous financial year and will last for 12 months, or a period within 5 business days shorter or longer than 12 months.
Corporate Tax period alignmentsource
The Tax Period for Corporate Tax is the Financial Year or part thereof. For a newly established company, if the first Financial Year begins on or after 1 June 2023, that Financial Year is the first Tax Period. If the first Financial Year begins before 1 June 2023, the first Tax Period is the subsequent 12-month Financial Year that begins on or after 1 June 2023.
No pro-rating of thresholds for short/long first Tax Periodsource
If the first Tax Period is longer or shorter than 12 months, thresholds such as the Small Business Relief revenue threshold are not pro-rated. The only exception is the de minimis threshold for the General Interest Deduction Limitation Rule (AED 12 million).
Conditions for changing the Tax Periodsource
A Taxable Person can apply to the FTA to change the start and end date of the Tax Period if: (1) the change is for liquidation, aligning with a parent/subsidiary for tax group or financial reporting, or a valid commercial/economic/legal reason; (2) the Tax Return for the period to be changed has not been filed; (3) the application extends the current Tax Period to a maximum of 18 months or shortens the next Tax Period to between 6 and 12 months; (4) the application is made within 6 months from the end of the original Tax Period; (5) if shortening, the application is not for a prior or current Tax Period.
Thresholds and rates
De minimis threshold for General Interest Deduction Limitation Rule (not pro-rated for short/long first Tax Period)source
AED 12 million
Penalties
Late filing or non-compliance with financial year rules (specific AED amounts not provided in sources)source
not published
Step by step
Step 1source
Determine the initial financial year based on the company's registration date. The first financial year will be between 6 and 18 months from that date.
Step 2source
If you need to change the financial year later, verify that you have a valid reason (e.g., alignment with parent company, commercial reasons) and that your licence is valid with no sanctions.
Step 3source
Apply to the relevant licensing authority for a change of financial year. For DMCC, raise Service Request SR 109 via the portal. For DDA, use the 'Change of Financial Year' service. For other free zones or mainland, follow their specific procedures.
Step 4source
If the change affects the Tax Period and does not meet the automatic acceptance criteria, apply to the FTA for a change of Tax Period via the EmaraTax portal, ensuring you meet all conditions (e.g., within 6 months of original period end, no return filed yet).
Step 5source
Update your financial statements and accounting records to reflect the new financial year, and ensure future Corporate Tax filings align with the new period.
Common mistakes
Assuming the first financial year must be exactly 12 months.
Not aligning the financial year with the Corporate Tax period, leading to mismatched filing obligations.
Failing to apply to the FTA for a change in Tax Period when changing the financial year for reasons not automatically accepted.
Missing the 6-month deadline to apply for a Tax Period change.
Not checking free zone specific requirements (e.g., DMCC sanctions, valid licence) before applying for a change.
Free zone specifics
DMCC: Change of financial year requires submitting Service Request SR 109 through the portal. The company must have a valid licence, no account sanctions, and the application must be submitted before the end of the current financial year. The new financial year must be 6–18 months. dmcc.ae/Support/how%20to%20guide/managing%20a%20company/COMPANY%20AMENDMENT/Guidance%20Notes%20-%20Change%20of%20Financial%20Year%202024.pdf?hsLang=en) source
Dubai Development Authority (DDA): Offers a 'Change of Financial Year' service for companies under Private Company Regulations. The requester must be the General Manager or Appointed Legal Representative. dda.gov.ae source
Questions the guide answers
Can my first financial year be less than 12 months?
Yes, the first financial year can be between 6 and 18 months from the date of registration, as per the Commercial Companies Law. This period is also accepted as your first Corporate Tax period.
Do I need to apply to the FTA to change my Tax Period if I change my financial year?
If the change meets the conditions set by the FTA (e.g., for alignment with a parent company or valid commercial reason), you must apply to the FTA. However, for newly established companies, the first financial year under the Commercial Companies Law is automatically accepted without application.
What happens if my first Tax Period is longer than 12 months? Are tax thresholds pro-rated?
No, thresholds like the Small Business Relief revenue limit are not pro-rated. Only the de minimis threshold for interest deduction limitation (AED 12 million) is an exception.
What is the deadline to file my Corporate Tax return?
You must file your Tax Return and pay any Corporate Tax due within 9 months from the end of your Tax Period.
What the research does not settle
- Specific AED penalty amounts for late filing or non-compliance with financial year rules are not provided in the sources.
- The exact revenue threshold for Small Business Relief is not mentioned in the given sources.
- Procedures for changing financial year in mainland Dubai (DED) or other free zones beyond DMCC and DDA are not detailed.
Sources
Change of Financial Year | Dubai Development Authorityhttps://dda.gov.ae/en/registration-licensing/existing-businesses/registration-and-licence-amendments/change-of-financial-yearread 2026-10-20
dmcc.aehttps://dmcc.ae/hubfs/o2-Website%202023%20Assets/o2-Website%202023-PDF%20Updates%20(Nov%2023read 2026-10-20
Conditions for Change in Tax Period for the Purposes ofhttps://tax.gov.ae/Datafolder/Files/Legislation/Corporate%20Tax/26%20april%20leg%20CT/FTA%20Decision%20No.%205%20of%202023%20on%20the%20Conditions%20for%20Change%20in%20Tax%20Period%20-%20for%20publishing.pdfread 2026-10-20
Federal Tax Authority - Media Centrehttps://tax.gov.ae/en/media.centre/news/Corporate.Tax.Public.Clarification.on.the.First.Tax.Period.aspxread 2026-10-20