The introduction of corporate taxes in the UAE, effective June 1, 2023, marks a significant change for the business landscape in the region. Understanding the requirements for UAE corporate tax registration, deadlines, and compliance procedures is essential for businesses to avoid penalties and ensure smooth operations.
Who Needs to Register for UAE Corporate Tax?
All businesses operating in the UAE must register with the Federal Tax Authority (FTA) for corporate tax, regardless of whether they are subject to the 0% or 9% tax rates. This requirement applies even to companies already registered for VAT. To complete this process, businesses will need a corporation tax registration ID or number.
Key Questions:
- Do all businesses need to register for UAE corporate tax?
- What is the process for obtaining a UAE corporate tax registration ID?
Registration Timeline
According to FTA guidelines, taxable persons have until the date of their first tax filing to register. For instance, businesses with a financial year ending on May 31 have until February 28, 2025, to complete their registration. Conversely, those with a financial year ending on December 31 have a deadline of September 30, 2025.
Registration Process
The UAE corporate tax registration process can be completed online through the FTA’s EmaraTax portal. It is advisable to consult with corporate tax advisors in the UAE to ensure all registration requirements are met.
Key Questions:
- When should businesses complete their UAE corporate tax registration?
- What resources are available to assist with the registration process?
UAE Corporate Tax Deregistration
If a corporation ceases to be subject to corporate tax, it must deregister with the FTA. This involves filing corporate tax returns, settling all tax liabilities, and paying any outstanding penalties.
Key Questions:
- How can a business deregister from UAE corporate tax?
- What are the consequences of not deregistering properly?
Filing Corporate Tax Returns
Businesses are required to file a single consolidated tax return within nine months of the end of each tax period. The self-assessment principle underlies the corporate tax regime, meaning businesses are responsible for ensuring their submissions are accurate and compliant with UAE laws.
Corporate Tax Deadlines
The UAE corporate tax deadlines provide ample time for businesses to prepare for filing and making payments. For example, businesses with a financial year starting on June 1, 2023, must file by February 28, 2025. In contrast, companies with a tax period starting on January 1, 2024, must file their returns by September 30, 2025.
Key Questions:
- What are the filing deadlines for UAE corporate tax returns?
- What happens if a business fails to file on time?
Exemptions from UAE Corporate Tax
Certain businesses are exempt from corporate tax, including those involved in the extraction of natural resources, which will continue to adhere to Emirate-level corporate taxation. Additionally, dividends and capital gains from qualifying shareholdings are exempt, as are qualifying intra-group transactions.
Key Questions:
- What types of businesses are exempt from UAE corporate tax?
- How can a business qualify for these exemptions?
Corporate Tax Rates
- 0% for taxable income up to AED 375,000.
- 9% for taxable income exceeding AED 375,000.
Corporate Tax Rate for Free Zones
Businesses in UAE free zones are also subject to corporate tax but will retain the tax incentives previously granted, provided they comply with regulatory requirements and do not engage in mainland UAE business activities.
Key Questions:
- What are the corporate tax rates for businesses in the UAE?
- How do free zones impact corporate tax obligations?
UAE Corporate Tax Registration Deadline
The FTA has set specific registration deadlines for taxable and certain exempt persons, effective from March 1, 2024. These deadlines vary based on the type of business and the date of incorporation.
Resident Juridical Persons
The deadlines for UAE resident juridical persons depend on their incorporation date and the issuance of their trade license. The earliest deadline for submission is May 31, 2024, for entities incorporated before March 1, 2024.
Non-Resident Juridical Persons
Non-resident juridical persons with a permanent establishment in the UAE must register for corporate tax and adhere to strict deadlines based on their establishment dates.
Key Questions:
- What is the registration deadline for resident juridical persons?
- How do non-resident juridical persons comply with UAE corporate tax regulations?
Consequences of Non-Compliance
Failure to register for corporate tax within the specified timelines will result in an administrative penalty of AED 10,000, as outlined in Cabinet Decision No. 75 of 2023. Businesses should prioritize compliance to avoid these penalties.
What Should You Do Next?
All businesses must determine their applicable UAE corporate tax registration deadlines and ensure timely registration. Assessing the potential impacts of corporate tax on operations and identifying eligibility for exemptions or reliefs is crucial.
How Can We Help?
At Raes Associates, our award-winning team specializes in corporate tax matters across various industry sectors in the Middle East. We are well-equipped to assist businesses with their corporate tax requirements in the UAE, including registration and compliance strategies. Contact us today to navigate the complexities of UAE corporate tax effectively.
