The UAE has long been considered a tax-efficient destination for investors and businesses. In line with international tax norms and to broaden its revenue base, the government of the UAE imposed Corporate Tax (CT). The UAE announced a Corporate Tax regime that became effective on June 1st, 2023 and applies to all business operations in the UAE, including Free Zone companies.
In this complete guide, you will learn everything you need to know about registering for corporate tax in the UAE, how corporate tax consultants can help you, deadlines, tax calculation methods, necessary documents for registration, and more importantly, if registering for corporate tax is mandatory for you. Here is a Detailed guide for how businesses can approach the tax landscape effectively.
Corporate Tax Consultant in UAE.
Corporate Tax Consultant, A corporate tax consultant in the UAE helps business owners comprehend and meet the corporate tax requirements of the UAE. Thanks to the multitude of tax rules and the possibility of incurring penalties for not complying, businesses usually have to seek a tax consultant who can guarantee that they fulfill everything required of them.
Role of a Corporate Tax Consultant:
- Providing expert guidance on UAE corporate tax laws.
- Helping businesses optimize tax liabilities and ensure compliance.
- Assisting in tax planning strategies to minimize tax burdens.
- Preparing and filing corporate tax returns.
- Ensuring proper documentation and record keeping.
- Advising businesses on Free Zone tax benefits and exemptions.
- Representing businesses in case of tax audits or disputes with the Federal Tax Authority (FTA).
Services offered by a corporate tax consultant can benefit businesses the most, and they can save time and money, as they ensure that the companies adhere to the laws. Tax professionals who are able to deal with the complexity of UAE tax laws help companies operating in multiple sectors or Free Zones in the most.
Deadline for Corporate Tax Registration in UAE.
Businesses must register for corporate tax by set dates, according to the UAE’s Federal Tax Authority (FTA). Compliance is mandated for companies unless they want to face penalties and legal actions.
Corporate Tax Registration Deadlines:
- Companies that were incorporated and first registered before June 1, 2023: Registration must happen until December 31, 2023.
- Companies incorporated after June 1, 2023: Three months from incorporation.Free Zone companies: Must register within time frames specified by the FTA by their tax treatment.
- For non-European multinational entities with revenues over EUR 750 million, there are also resultant international tax reporting requirements.
The penalties for failing to register on time include significant fines, loss of the right to operate your business, and other compliance issues. The UAE government encourages businesses to register as early as possible to avoid last-minute rushes and compliance complications.
Corporate Tax for Free Zone Companies
Sources have noted that Freezones may also provide for a preferential tax regime for business conducted in those areas (subject to various conditions).
Things to know about the Corporate Tax-Free Zone:
- As long as Free Zone companies fulfill specific conditions imposed by the FTA, they can be exempt from corporate tax at a rate of 0%.
- God forbid a Free Zone company has transactions with UAE mainland entities, they could catch a 9% corporate tax.
- Some Free Zones have special taxation rules such as DIFC, ADGM, JAFZA, and DAFZA.
- Tax requirements for Free Zone companies Companies not meeting Free Zone requirements will be regarded as mainland companies and taxed on that basis.
- Companies operating in the Free Zone and involved in eligible activities (e.g international trade, logistics, or manufacturing) will retain the effective 0% tax status if they meet eligibility requirements
It is up to each Free Zone company to weigh their tax liabilities and ensure that they remain compliant in order to preserve the 0% tax advantage.
How to Register for Corporate Tax in UAE
Corporate tax registration in the UAE is managed by the Federal Tax Authority (FTA) through an online portal.
Steps to Register for Corporate Tax in UAE:
- Create an FTA Account: Go to the FTA e-Services portal and register. Fill out Online Registration Form: Fill out business details including trade license number, company structure,
- and activitiesDocument Upload: All relevant documents must be uploaded (as explained below). Review and submit: Verify the information and submit the application.
- Obtaining a Tax Registration Number (TRN): When the application is approved, the FTA will issue a unique tax registration number (TRN), confirming compliance.
It is wise to register early and to avoid last-minute complications.
How to Calculate Corporate Tax in UAE.
Corporate tax is assessed in the UAE on net taxable income. Taxable profits must be evaluated, and the relevant corporate tax rates applied.
Corporate Tax Rates:
- You pay 0% tax for taxable income up to AED 375,000.
- 9% taxes on taxable income for any amount above AED 375,000.
- 15% tax for Multinational enterprises (MNEs) regardless of the country of residence, when the group’s consolidated revenues for the previous [financial] year are equal to or exceed EUR750 million (OECD’s Pillar Two rules).
Corporate taxes are calculated on the following Lines:
Now, let’s say a company has a taxable income of AED 600,000.
- First AED 375,000 0% tax = AED 0 Tax
- The balance of AED 225000 is taxed at 9% = AED 20250
- Corporate Tax Payable (in AED) = AED20,250.00.
To compute taxes accurately, companies need to keep proper financial records.
Documents Required for Corporate Tax Registration in UAE
Businesses need to provide the following documents to complete their corporate tax registration:
Required Documents:
- Trade License Copy (valid trade license issued in UAE).
- Company Information (name, legal structure, and business activities).
- Owner/Shareholder Details (passport copies and Emirates IDs of owners/directors).
- Financial Statements (profit & loss statements, balance sheets, and other financial reports).
- Business Bank Account Details.
- Memorandum of Association (MOA) or Articles of Association (AOA).
- Tax Registration Number (TRN) for VAT (if applicable).
- Any additional documentation required by the FTA based on business activity.
Ensuring the submission of accurate documents will speed up the approval process and prevent delays.
Is Corporate Tax Registration Mandatory in UAE?
Indeed, in the UAE most businesses need to register for corporate tax. Registration is mandatory for all companies unless there is an explicit exemption provided by the FTA.
Who Must Register for Corporate Tax?
- Main Hariendasoesi jey Santa hukum pasomarsar ga maazir.
- Free Zone companies (if eligible for tax exemptions)
- Foreign companies that have a permanent establishment in the UAE.
- Businesses with taxable revenues of more than AED 375,000.
Exemptions from Corporate Tax:
- Government entities and government-controlled organizations.Nonprofit
- organizations (approved by the FTA).
- Public benefit organizations (meeting FTA criteria)
Corporate tax UAE The introduction of corporate tax in the UAE marks a significant departure in the country’s taxation regime They must register with the government and comply with tax regulations and filing deadlines to avoid penalties.
Corporate tax consultants can assist businesses in managing their tax liabilities and ensuring compliance with the latest regulations. Companies learn about corporate tax rates, exemptions, and deadlines by understanding and thus plan and ensure long-term financial sustainability. XeltovoPrime