Corporate Tax Registration: 2024 New Deadlines & AED 10,000 Penalty

Corporate tax registration in the UAE is mandatory for all eligible entities and individuals operating within the country. On February 22, the Federal Tax Authority (FTA) issued Decision No. 3 of 2024, setting new UAE Corporate Tax registration deadlines. In Addition, Cabinet Decision No. 10 of 2024 enforces a stringent administrative penalty of AED 10,000 on businesses failing to register for the UAE Corporate Tax within the specified deadlines. These regulations come into force on March 1, 2024. In this article, we will explore the details of new Corporate Tax Registration deadlines and the penalties for non-compliance.

As December 31st approaches, don’t risk the AED 10,000 penalty! If you haven’t registered for Corporate Tax yet, now is the time to take action. Reach out to the filings.ae experts today and ensure your compliance before it’s too late!

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Synopsis of Cabinet Decision on Corporate Tax Registration

The Cabinet Decision on 2024 Corporate Tax Registration introduces new deadlines and imposes a hefty penalty for non-compliance.

• Deadline: New deadlines for corporate tax registration are set for 2024, with specific dates based on the issuance of the entity's license.
• Penalty Amount: AED 10,000 penalty was announced for non-compliance with the March 1, 2024 deadline.
• Effective Date: The Decision takes effect on March 1, 2024.
• Compliance Obligations: All businesses and eligible entities operating in the UAE must adhere to the new Corporate Tax registration deadlines outlined in the Cabinet Decision.

The official notification regarding Federal Tax Authority Decision No. 3 of 2024 is here for reference.

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What is Corporate Tax?

Corporate tax in the UAE is a direct tax imposed on the net profits earned by corporations and various business organisations. Often referred to as 'Corporate Income Tax' or 'Business Profits Tax,' this tax mandates that businesses allocate a specified portion of their profits to the government as tax.

Corporate Tax Registration

Corporate Tax Registration in the UAE is a compulsory process for companies and taxable entities to align with the nation's tax laws, as outlined by the Federal Tax Authority (FTA). It requires entities to formally register with the FTA, securing a Corporate Tax Registration Number crucial for meeting tax obligations as per Federal Decree-Law No. 47 on the Taxation of Corporations and Businesses, effective for financial years commencing on or after June 1, 2023.

Who should register for Corporate Tax in the UAE?

In the UAE, all businesses and individuals conducting economic activities that generate taxable income must register for Corporate Tax. This includes mainland companies, free zone companies, and foreign entities doing business in the UAE, subject to specific criteria set by the Federal Tax Authority (FTA).

Click here to learn about Who should get corporate tax registration in the UAE.

Corporate Tax Registration Exemptions

In the UAE, some entities don't have to register for Corporate Tax or are exempt based on specific criteria:

Automatically Exempt:

• Government Entities: Don't need to register unless they do taxable business.
• Extractive and Non-Extractive Natural Resource Businesses: Typically exempt from Corporate Tax.

Exempt with Notification:

• Government-controlled entities and Public Benefit Entities can be exempt if they inform the Ministry of Finance and meet specific conditions.

Exempt by Cabinet Decision:

• Investment Funds, Pension, and Social Security Funds might be exempt if recognised by a Cabinet Decision and meet required conditions.

Exempt with FTA Approval:

• Subsidiaries of Exempt Entities need to apply for exemption. If approved, they might not have to register until October 1, 2023, or June 1, 2024, depending on the entity type.

UAE Corporate Tax Rates

The corporate tax rate in the UAE is set at 9% on the net profits of businesses. To support small businesses and startups, a 0% corporate tax rate applies to net profits up to AED 375,000.

Therefore, any business earning a taxable net profit exceeding AED 375,000 must pay corporate tax at 9% on their net profits.

New Deadlines for Corporate Tax Registration

The Corporate Tax Registration application deadline will be determined by the issuance date of the resident UAE entity's license. For instance, entities issued licenses between January 1 and January 31 must submit their applications by May 31, 2024. The deadlines are set as follows:

Corporate Tax Deadlines for Different types of Entities

Here are the detailed Corporate Tax registration deadlines in the UAE, categorised by entity type and specific conditions:

Juridical Persons Without a License by March 1, 2024

For juridical persons without a Business license as of March 1, 2024, the FTA mandates Corporate tax registration within three months, by May 31, 2024. The earliest issued license determines the registration timeline if an entity holds multiple licenses.

For entities established after March 1, 2024,

• Resident businesses must register within three months from their date of incorporation or recognition.
• Non-resident entities should register within three months from the end of their financial year.

For non-resident entities before March 1 2024:

• Those with a permanent establishment in the UAE must register within nine months of establishment.
• Entities with a UAE nexus have until May 31 to register.

For non-resident entities established after March 1:

• Those with a permanent establishment in the UAE have six months to register from the date of establishment.
• Entities with a UAE nexus must register by May 31.

Natural Persons

• Resident Natural Persons: Those with an annual turnover exceeding Dh1 million must register by March 31 of the following year.
• Non-Resident Natural Persons: Required to register within three months of becoming subject to tax in the UAE.

The Corporate Tax deadline details have been provided in a table format for easy reference:

Note:*A "juridical person" is an entity established or otherwise recognised under the laws and regulations of the UAE, or under the laws of a foreign jurisdiction, that has a legal personality separate from its founders, owners and directors.

*The term "natural person" in the Corporate Tax Law refers to an individual.

Penalty for Late Corporate Tax Registration

As mentioned above, Businesses failing to meet the Federal Tax Authority's deadlines for Corporate Tax registration will incur a penalty of AED 10,000, as announced by the Ministry.

• The penalty for late tax registration corresponds to the penalties imposed for delayed registration in excise tax and value-added tax (VAT).
• The Cabinet decision is scheduled to take effect on March 1, 2024. This indicates that the penalty will be applicable starting from March 1, 2024.

Businesses must adhere to the registration deadlines to avoid this significant financial penalty.

Documents Required for UAE Corporate Tax Registration

For Corporate Tax registration in the UAE, businesses need to prepare and submit the following documents online:

• Valid passport copy of the owner(s)/partner(s).
• Current Trade License copy.
• Contact details of a responsible person (mobile and email).
• Company's address and P.O. Box.
• Latest Annual Financial Audit Report.
• Memorandum of Association (MOA) or Power of Attorney (POA).
• Valid Emirates ID of the owner(s)/partner(s).

Additional documents for Free Zone companies in the UAE for Corporate Tax Registration include the following:

• Lease agreement for your Free Zone location.
• Documents showing your company is set up in the Free Zone.
• Passport copies of the company's managers or people who can sign off on important documents.
• A letter of approval (NOC) from the Free Zone authorities.

How to Register for Corporate Tax?

To register for UAE Corporate Tax, follow these steps through the EmaraTax platform, the Federal Tax Authority's dedicated online portal:

• Access EmaraTax: Visit the EmaraTax platform, which serves as a comprehensive portal for managing Tax registrations, returns, refunds, deregistrations, and payments, including VAT.
• Account Creation or Migration: If you're new to the platform, create an account on EmaraTax. Existing FTA Account holders can migrate their accounts to EmaraTax by following the EmaraTax Login guide.
• Submit Required Documents: Prepare and submit all necessary documentation for Corporate Tax registration in the UAE as specified by the EmaraTax platform or FTA guidelines.
• Complete Registration: Follow the prompts and instructions on the EmaraTax portal to complete your Corporate Tax registration successfully.

Corporate Tax Returns Filing

After completing the Corporate Tax registration, businesses must file Corporate Tax returns and settle any outstanding taxes. This process must be completed within nine months after their specific tax period ends.

For businesses seeking assistance with this process, filings.ae offers professional services to help you file your Corporate Tax returns accurately and on time.

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Conclusion

In conclusion, the recent regulatory decisions regarding Corporate Tax registration in the UAE underscore the critical importance of timely compliance for businesses. With clear deadlines and significant penalties in place, it's essential for companies to act swiftly to avoid financial repercussions. By registering for Corporate Tax and adhering to regulatory requirements, businesses demonstrate their commitment to legal compliance, unlock potential tax benefits, and foster trust within the business community.

Get Corporate Tax Registration Easily with Filings.ae!

Timely registration for Corporate Tax is essential to avoid penalties. With the deadline approaching, businesses must act promptly. Filings.ae tax experts are here to guide you through the entire registration procedure, guaranteeing adherence to Federal Tax Authority (FTA) rules.

Avoid the hefty AED 10,000 penalty. Contact our experts now and secure your corporate tax registration without delay!

Get Started! Updated on: December 6th, 2024 11:33 PM