UAE Tax CT Compliance, penalties, anti-abuse and Pillar Two: practice questions with answers

Question 1

Bayraq Holding LLC is the parent of a tax group with three subsidiaries, all with 31 December year-ends. Which statement about the group's Corporate Tax return and payment for 2025 is correct?

1. A Each member files its own return by 30 September 2026 and Bayraq Holding pays the total
2. B Bayraq Holding files one return by 31 March 2026, and payment is due by 30 September 2026
3. C Bayraq Holding files one return by 31 December 2026, and each member pays its own share
4. D Bayraq Holding files one return for the group and pays the tax by 30 September 2026

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Answer: D. Article 53(1), Federal Decree-Law No. 47 of 2022 (CT Law): a tax return is due within 9 months of the end of the tax period, and Article 48 sets the same 9-month deadline for payment. A tax group is one taxable person represented by the parent, which files the group's return (Articles 40(4)-(5) and 53). For 2025: 31 December 2025 + 9 months = 30 September 2026.

Question 2

In March 2026 Qindeel Trading LLC discovers that its 2024 Corporate Tax return understated its tax payable. Under the Tax Procedures Law as amended from 1 January 2026, how should it correct the error?

1. A By voluntary disclosure if the FTA has specified that type of error; otherwise by correcting it through a tax return
2. B By voluntary disclosure in every case, within 20 business days of discovering the error
3. C Only by waiting for the FTA to issue a tax assessment, as a filed return cannot be changed
4. D By filing a reconsideration request with the FTA within 40 business days

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Answer: A. Article 10, Tax Procedures Law (Federal Decree-Law No. 28 of 2022 as amended by Federal Decree-Law No. 17 of 2025): from 1 January 2026 there are two ways to correct errors. Voluntary disclosure applies to the cases the FTA specifies; other errors may be corrected through a subsequent tax return. Reconsideration is a dispute route against FTA decisions, not a correction method.

Question 3

Sukoon Pharma Distribution LLC's 2024 Corporate Tax return was due on 30 September 2025. Before any FTA audit notice, it submitted a voluntary disclosure on 14 April 2026 showing additional tax of AED 85,000. Under Cabinet Decision No. 75 of 2023, what is the percentage-based penalty for the voluntary disclosure (counting each month or part month)?

1. A AED 850
2. B AED 5,100
3. C AED 5,950
4. D AED 18,700

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Answer: C. Cabinet Decision No. 75 of 2023 (as amended): a voluntary disclosure of errors attracts a penalty of 1% of the tax difference for each month or part month from the day after the return due date to the date of the disclosure.

Months from 1 October 2025 to 14 April 2026: October, November, December, January, February, March and part of April = 7.

Penalty = 7% x AED 85,000 = AED 5,950.

Question 4

Qamar Advisory runs a single consulting practice earning about AED 8.4m a year. From FY2026 the owner splits it into three new LLCs, each billing about AED 2.8m, while the same staff, office, clients and brand continue as before. There is no commercial reason for the split. Each LLC elects Small Business Relief. What is the most likely outcome?

1. A Each LLC may claim the relief, because each has revenue of AED 3m or less.
2. B The relief is denied only to the LLC with the highest revenue in the period.
3. C The FTA may treat the split as artificial and deny the relief, as combined revenue exceeds AED 3m.
4. D The anti-abuse rules cannot apply because no cross-border transaction is involved.

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Answer: C. Ministerial Decision No. 73 of 2023 (Small Business Relief) provides that where the FTA establishes that a business has been artificially separated and the total revenue of the resulting entities exceeds AED 3,000,000, this is treated as an arrangement to obtain a Corporate Tax advantage under Article 50 of the CT Law (GAAR).

Here the split has no commercial reason, the businesses run as one, and combined revenue is about AED 8.4m, so the FTA can deny Small Business Relief and tax the profits.

Question 5

The Kepler Group, an in-scope MNE group with consolidated revenue well above EUR 750m every year, has a financial year running from 1 April to 31 March. For which of its financial years does the UAE Domestic Minimum Top-up Tax first apply to its UAE companies?

1. A 1 April 2024 to 31 March 2025
2. B 1 January 2025 to 31 March 2025, as a short transitional period
3. C 1 April 2025 to 31 March 2026
4. D 1 April 2026 to 31 March 2027

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Answer: C. Cabinet Decision No. 142 of 2024 applies the Domestic Minimum Top-up Tax to financial years beginning on or after 1 January 2025. For a group with a 1 April year-start, the first such year is 1 April 2025 to 31 March 2026. The year from 1 April 2024 is excluded because it began before 1 January 2025.

Question 6

Rawasi Holding LLC is the parent of a tax group with three subsidiaries, all with 31 December year-ends. The group's Corporate Tax return for 2024 was due on 30 September 2025 and was filed on 10 December 2025; the tax was paid on time. Under Cabinet Decision No. 75 of 2023 as amended, what is the penalty for the late return?

1. A AED 1,500
2. B AED 6,000
3. C AED 1,000
4. D AED 3,000

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Answer: A. A tax group files one tax return, submitted by the parent company for the group (Article 53(7), Corporate Tax Law), so a late filing is one violation for the group, not one per member. Under Cabinet Decision No. 75 of 2023 the penalty for a late return is AED 500 for each month or part of a month for the first 12 months, then AED 1,000 a month.

Delay from 1 October to 10 December 2025: October (1), November (2), part of December (3). Penalty = 3 × 500 = AED 1,500. The members are jointly and severally liable for the group's tax and penalties, but that does not multiply the penalty.