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The UAE Corporate Tax Law, introduced through Federal Decree-Law No. 47 of 2022, constitutes a direct levy by the Federal Tax Authority (FTA) on the taxable incomes of corporations and businesses. This initiative aligns with the UAE’s objectives to boost its economy and improve the financial well-being of companies operating within its borders. The FTA, as the regulatory body oversees the implementation and collection of corporate and federal taxes in the UAE, in line with the Corporate Tax Law.
In order to ensure adherence, the FTA also mandates that all taxable entities in the UAE adhere to specified deadlines for tax registration. This blog post will explore the most recent deadline for submitting tax registration in the UAE.
Overview of Corporate Tax Registration in the UAE
In recent years, the United Arab Emirates (UAE) has transitioned from its traditional tax-free status to implementing a federal corporate tax regime as of January 1, 2020. This change marks a fundamental transformation in the country’s fiscal policies, aiming to diversify revenue streams and enhance economic sustainability.
The corporate tax primarily targets sectors such as banking, insurance, and profitable industries, with a standard rate of 9%. However, certain businesses may be subject to different rates or exemptions based on various factors.
Companies that fall under the scope of corporate tax must undertake the process of tax registration with the Federal Tax Authority (FTA), a regulatory body responsible for overseeing tax matters in the UAE. This tax registration application process entails submitting essential documentation, including business licenses, incorporation documents, financial statements, and comprehensive details of shareholders and directors.
Upon successful registration, companies are issued a Tax Identification Number (TIN) or Corporation Tax Registration Number (TRN) by the FTA, serving as a unique identifier for all tax-related transactions and communications with the tax authority. Registered entities must adhere to strict filing requirements, with annual tax returns reflecting accurate financial activities and tax liabilities for the relevant period.
Non-compliance with tax regulations, including failure to register or file tax returns, can result in penalties and fines imposed by the FTA. Hence, it is crucial for all businesses operating in the UAE to understand and adhere to these tax regulations to avoid legal or financial repercussions.
Who Should Register for Corporate Tax in UAE?
In the United Arab Emirates (UAE), businesses engaged in specific sectors are typically required to register for corporate tax with the Federal Tax Authority (FTA). Here’s a list of who should register for corporate tax in the UAE:
Taxable Entities:
Companies that conduct business activities that generate revenue, such as trading, manufacturing, banking institutions, insurance companies, individual business owners, or providing services, are required to register for corporate tax if their annual revenue exceeds AED 375,000 (approximately USD 102,000).
Branches of Foreign Companies:
Branches of foreign companies operating in the UAE are also subject to corporate tax if they meet the revenue threshold.
Permanent Establishments (PEs) of Foreign Companies:
If a foreign company has a permanent establishment in the UAE, such as a branch office or a subsidiary, and it meets the revenue threshold, it must register for corporate tax.
Companies Engaged in Oil and Gas Exploration or Production:
Companies engaged in the exploration or production of oil and gas in the UAE are subject to special tax provisions, and they must register for corporate tax.
Free Zone Companies:
Companies operating within free zones may be subject to corporate tax if the relevant free zone authority has opted to implement corporate tax within its jurisdiction. However, many free zones in the UAE offer tax exemptions or incentives to attract businesses.
It’s essential for businesses in the UAE to stay updated on tax regulations and consult with tax advisors or legal experts to ensure compliance with the latest requirements.
Corporate Tax Registration Timeline For Taxable Persons in UAE
The Federal Tax Authority (FTA) of the UAE has outlined specific timelines and requirements for corporate tax registration under the Federal Decree-Law No. 47 of 2022, effective from March 1, 2024. Here’s an overview of UAE CT Law requirements for various categories of juridical and natural persons:
1. Resident Juridical Persons Established Before 1 March 2024
For juridical persons (corporates) resident in the UAE and established before March 1, 2024, the FTA mandates that these entities must register for corporate tax based on the month of their license issuance. The timeline is as follows:
Licenses issued on 1 January – 28/29 February must register by May 31, 2024.
Licenses issued from 1 March – 30 April must register by June 30, 2024.
Licenses issued from 1 May – 31 May must register by July 31, 2024.
Licenses issued from 1 June – 30 June must register by August 31, 2024.
Licenses issued from 1 July – 31 July must register by September 30, 2024.
Licenses issued from 1 August – 30 September must register by October 31, 2024.
Licenses issued on 1 October – 30 November 2024 must register by November 30, 2024.
Licenses issued in 1 December – 31, must register by December 31, 2024.
Entities without a license as of the effective date of the decision must register within three months, i.e., by May 31, 2024. (In a situation where an entity has more than one license, the license with the earliest issuance date shall be used).
2. Resident Juridical Persons Established On or After 1 March 2024
Juridical persons established under the laws of the UAE (including in a Free Zone) on or after March 1, 2024, must submit their tax registration applications within three months from the date of incorporation, establishment, or recognition. For example, a company incorporated on June 16, 2024, must register by September 16, 2024.
On the other hand, juridical persons’ deadline for businesses established under the laws of a foreign jurisdiction but centrally managed and controlled in the UAE is 3 months after the end of the financial year of that company.
3. Non-resident Juridical Persons with Business Connections in the UAE Before 1 March 2024
Non-resident juridical persons who have a business in the UAE before March 1, 2024, must also register for corporate tax. The deadline for registration is within three months from the effective date of the UAE Federal Tax Authority (FTA) decision, meaning by May 31, 2024.
On the other hand, a person who has a Permanent Establishment (PE) in the UAE within the scope of corporate tax prior to March 1, 2024, has 9 months from the date of existence of the PE to register for the tax.
4. Non-Resident Juridical Persons with Business Connections in the UAE On or After 1 March 2024
For non-resident juridical persons with a nexus in the UAE on or after March 1, 2024, the registration timeline is three months from establishing the business. This would include setting up a permanent establishment or generating UAE-sourced income.
On the other hand, a person who has a Permanent Establishment (PE) in the UAE on or after March 1, 2024, has 6 months from the date of existence of the PE to register for the tax.
5. Resident Natural Persons Engaged in Business Activities During 2024
Resident natural persons who engage in business activities during the 2024 Gregorian Calendar year or subsequent years whose total turnover exceeds the required threshold deadline for submitting a tax registration application is 31 March of the subsequent Gregorian calendar year
6. Non-Resident Natural Persons Engaged in Business Activities During 2024
A Non-resident person conducting business in the UAE must register for corporate tax within three months from the start of their business activities. This applies to those who start business activities in 2024 or later.
Consequences of Non-Compliance With Corporate Tax Law Deadlines
The UAE’s Federal Decree-Law No. 47 of 2022 outlines stringent requirements for corporate tax registration and compliance. Non-compliance with these deadlines can lead to significant penalties and repercussions for businesses. Here are the consequences of non-compliance
1. Administrative Penalties
The Federal Tax Authority (FTA) has established specific penalties for failing to comply with corporate tax registration and filing deadlines. These include:
Late Registration Penalty: Entities that fail to register within the specified timelines will incur an administrative penalty of AED 10,000. This penalty is imposed to encourage timely compliance and ensure all taxable entities are accounted for within the tax system.
Late Filing Penalties: Missing the deadlines for filing tax returns can result in additional penalties. These can include fixed fines for each late submission and a percentage-based penalty on the unpaid tax. Persistent delays can lead to escalating fines, compounding the financial burden on the non-compliant entity.
2. Interest on Unpaid Tax
Interest may accrue on unpaid tax amounts due to late payments. This interest is calculated based on the number of days the payment is overdue, further increasing the financial liability of the non-compliant business.
3. Increased Scrutiny and Audits
Non-compliance with corporate tax regulations can trigger increased scrutiny from the FTA. Businesses that fail to meet registration or filing deadlines are more likely to be audited. These audits can be time-consuming and disruptive, requiring extensive documentation and justification for financial activities.
4. Reputational Damage
Non-compliance can lead to reputational damage, affecting the business’s relationships with stakeholders, including investors, customers, and partners. Being flagged for non-compliance might raise concerns about the entity’s governance and financial management practices.
5. Legal Consequences
In severe cases, persistent non-compliance can lead to legal action. This can include court proceedings, where businesses may face additional fines and legal fees. In extreme cases, it might also lead to restrictions on business operations or licenses being revoked.
6. Operational Disruptions
Failure to comply with tax regulations can result in operational disruptions. The time and resources diverted to handle penalties, audits, and legal issues can detract from core business activities, affecting productivity and growth.
What Can You Do To Ensure Compliance?
To ensure compliance with corporate tax registration deadlines in the UAE, consider working with Tulpar Global Taxation for expert assistance. Tulpar offers comprehensive services tailored to meet your tax registration needs, including:
Timely Compliance: Tulpar ensures that all necessary paperwork is completed accurately and submitted on time, avoiding any penalties or fines for late registration.
Expert Guidance: With their in-depth knowledge of UAE tax regulations, Tulpar provides expert guidance on navigating the complexities of corporate tax registration, ensuring adherence to all legal requirements.
Tailored Solutions: Tulpar understands that every business is unique. They provide personalized solutions to meet the specific tax registration needs of your company, ensuring compliance while minimizing administrative burdens.
Continuous Support: Tulpar offers ongoing support and assistance, keeping you updated on any changes to tax laws and regulations that may affect your compliance status.
By partnering with Tulpar Global Taxation, you can rest assured that your company’s corporate tax registration deadlines in the UAE are met efficiently and effectively, allowing you to focus on your core business activities with peace of mind.
