The Federal Tax Authority (FTA) has clarified through Decision No. 5 of 2023 the rules for changing the tax period for corporate income tax purposes. The Decision provides that a taxpayer may apply to the FTA to change the start and end dates of the tax period or to use another tax period if the following conditions are met:
- the change is made for one of the following reasons:
- liquidation of the taxpayer;
- the alignment of the resident taxpayer's financial year with the financial year of another resident taxpayer for the purpose of forming a tax group or joining an existing tax group, or the alignment of the taxpayer's financial year with the financial year of its domestic or foreign head office, subsidiary, parent or ultimate parent company for the purpose of financial reporting or for the purpose of taking advantage of a tax relief available under corporate tax law or under the legislation of a foreign jurisdiction; or
- there is a valid commercial, economic or legal reason to change the tax period;
- the taxpayer has not yet filed the tax return for the tax period for which the change is requested; and
- the request to change the tax period relates to any of the following:
- the extension of the current tax period to a maximum of 18 months; or
- to shorten the next tax period to between 6 and 12 months. The application must be made within 6 months of the end of the original tax period. Taxpayers applying to shorten their tax periods may not apply to shorten previous or current periods.
Decision No. 5 of 2023 on the conditions for changing the tax period for corporate income tax was published on the official website on 7 April 2023 and will enter into force as of 1 June 2023.