Navigating the complex world of corporate tax in the UAE can be tricky for businesses. The Federal Decree-Law No. 47 of 2022 mandates eligible entities to comply with new corporate tax regulations based on a specific criterion. Through this comprehensive guide, we will take you through the step-by-step process of UAE corporate tax registration and its obligations, ensuring that your business keeps pace with the latest statutory requirements.
The expert team of Shuraa Tax Consultants and Accountants holds years of experience assisting businesses with their tax needs. Their easy-to-follow instructions and exclusive knowledge help entities confidently navigate the registration process and avoid potential pitfalls along the way.
Corporate Tax in the UAE
Corporate Tax is basically a direct tax imposed on the net profits of businesses operating in the UAE. The UAE government introduced this tax system to align the country with global tax transparency standards, diversify government revenues, and foster a competitive business environment.
The tax rates applied to businesses varied based on their net profits –
- 0% on profits up to AED 375,000
- 9% on profits above AED 375,000
The corporate tax applies to all entities operating in the UAE. However, certain incomes are exempted from this tax, such as employment income,dividends,andcapital gains.
Exemption from Corporate Tax in the UAE
Corporate tax applies to a wide range of businesses in the UAE, while specific sectors are not subject to this tax, such as –
- Companies involved in the extraction of natural resources
- Income derived from personal investments, including dividends, capital gains, interest earned on savings, real estate investments in an individual’s capacity
- Qualifying intra-group transactions and reorganizations
Eligibility for Corporate Tax Registration UAE
Before diving into the registration process, it is crucial to learn about the eligibility to register for Corporate Tax in the UAE. Generally, all companies operating in the UAE are subject to corporate tax, including resident, non-resident, free zone, and mainland entities. However, certain exemptions may apply depending on the type and size of the business.
Therefore, it is always better to consult with a tax professional from Shuraa Tax to determine the specific obligations of your company.
UAE corporate tax registration: Procedure
The process of Corporate Tax Registration UAE involves several steps which we have outlined in detail. Let’s take a closer look at these steps and ensure a smooth and hassle-free registration process.
Obtain a tax registration number (TRN) –
The first step to UAE corporate tax registration is obtaining a tax registration number (TRN), a unique number assigned to businesses individually by the tax authorities. This number should be used by the company for all tax-related transactions. The process of obtaining the TRN starts with visiting the official website of the Federal Tax Authority (FTA) and completing the online registration form. You need to provide relevant information information about the business, such as its legal structure, trade license number, and contact details. After submitting the form, the FTA will review the application and issue the TRN accordingly.
Gather required documents–
After obtaining the TRN, gather the necessary documents for registration. The documents required for the process will depend on the type of business. However, the general inclusions are:-
- A copy of the trade license issued by the relevant authorities in the UAE.
- A copy of the company’s MOA (Memorandum of Association) outlining the activities, shareholders, and share capital.
- Passport copies of all business shareholders, directors, and authorized signatories.
- Emirates ID copies of all the authorized signatories
Before submitting the documents, the applicant needs to ensure that they are complete and up-to-date.
Submit the registration application –
Now, submit the tax registration application along with the TRN and required documents. The input required in the application may include details about business activities, turnover, and any exemptions or special considerations. Also, make sure to double-check all information before final submission to avoid any complications.
Wait for FTA’s approval –
Once the application is successfully submitted, the FTA will thoroughly review it and verify the information provided. It may request additional documents or clarification if needed. Therefore, the applicant must be sure to respond promptly to ensure a smooth approval process.
File for Corporate Tax –
Once the application is approved by the FTA, a tax registration certificate will be issued to the business confirming its registration for corporate tax in the UAE. Now that you have your certificate in hand, you can proceed to paying your corporate taxes. The amount of tax will depend on your business activities and turnover. For an accurate calculation, it is advisable to consult with a tax professional of Shuraa who will help you meet your corporate tax obligations.
Corporate Tax Registration UAE: Deadlines and Penalties
The deadline for registering for corporate tax is determined based on the time of issuance of the company’s commercial license. For instance,
If the license was issued in January–February 2024, the registration deadline would be 31 May 2024. Similarly, for March–April license issuance, the company must register by 30 June 2024, and for MAY issuance, the registration must be done by 31 July 2024.
If the company fails to register by the specified deadline, it may be subject to a penalty of AED 10,000. Furthermore, continued non-compliance can lead to daily fines, and legal action, further resulting in reputational damage.
UAE corporate tax registration: Common mistakes to avoid
While the registration process may seem straightforward, there are chances of some common mistakes that businesses can often make. Being aware of these mistakes can help them avoid unnecessary complications. For example,
- Incomplete or inaccurate information – Businesses must ensure that all information provided is accurate and complete.
- Missing deadlines – Missing the deadlines specified by the authorities can result in delays or even penalties for the business. Hence, they need to be well-informed of all timeframes.
- Lack of understanding – Having a clear understanding of the tax obligations and the registration process can ensure a smooth experience and compliance with the tax authorities.
Thus, to streamline the registration process and ensure a smooth experience, businesses must ensure to avoid these mistakes. Consulting with professional tax advisors of Shuraa Tax is highly recommended for tailored advice and support.
Ongoing Corporate Tax obligations
After successful registration for corporate tax with the FTA, businesses must ensure to adhere to ongoing compliance requirements, such as –
- Filing tax returns – Businesses must make sure to file their tax returns within nine months after the end of the tax period.
- Maintaining financial records – Keeping detailed and accurate records is mandatory for audit and tax filing purposes.
- Deregistration – If the business terminates operations, it must file a final tax return and deregister for corporate tax.
The deregistration process includes two simple steps:-
- Make sure that all liabilities are settled and file a final tax return.
- Access the EmaraTax portal and submit a deregistration application.
Conclusion
Hence, with the help of this guide and the support of experienced professionals of Shuraa Tax Consultants and Accountants, you can confidently navigate the UAE corporate tax registration process and lead your business on the path to financial success. All you need to do is connect with the expert of Shuraa Tax and get more understanding of UAE Corporate Tax Law and Registration.
So, take the first step and reach out to Shuraa Tax at info@shuraatax.com.