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Mandatory Corporate Tax Registration in the UAE: 2024 Guide

For a long time, the UAE was one of the few jurisdictions in the world to levy zero tax against most corporate and personal income. However, to help the nation maintain its world-leading business environment and infrastructure, the UAE’s rulers have introduced several changes to this policy.

In 2022, a 9% corporate tax rate was announced, payable on annual company profits over AED 375,000. While this represents a significant shift in the UAE’s tax policy, it remains one of the most attractive financial environments in the world, with many SMBs continuing to pay no tax.

As a result of the change, many businesses across the UAE are now required to register with the Federal Tax Authority (FTA). In some cases, this registration must be completed by 31 May 2024.

If you believe you are a taxable entity and are yet to register with the FTA, here’s what you need to do to comply with the new regulations. 

Understanding corporate tax in the UAE

After much deliberation, the decision to introduce a corporate tax in the UAE was made to help the country cement its position as a leading business and investment hub.

With a reliable stream of tax income, the UAE government is better placed to further develop the country and achieve its ambitious growth and transformation targets. The move also underpins the country’s commitment to meeting international tax and financial transparency standards.

For businesses within the UAE, the new rules mean new responsibilities. Depending on which financial year your business follows, your income became eligible for corporate tax from either 1 June 2023 or 1 January 2024.

Corporate tax is applicable to all businesses conducting commercial activities in any emirate within the UAE. This includes foreign entities that regularly trade in the UAE and many free zone businesses, though any active tax incentives in place will be honoured for the time being.

That said, while all businesses are liable for corporate tax, it is only levied on taxable profits over AED 375,000 per year. No tax will be payable if your company earnings are below this threshold.

For the purposes of corporate tax, the FTA defines taxable income as “the accounting net profit (or loss) of the business, after making adjustments for certain items as defined in the Corporate Tax Law.”

It is also important to reiterate that corporate tax is only levied on company earnings. The new 9% rate does not apply to individual employment income, dividends, capital gains, interest, royalties or any other investment income.

Who needs to register for corporate tax?

Any taxable entity in the UAE must register with the FTA, regardless of whether earned income ultimately exceeds the AED 375,000 threshold. Failure to do so can lead to fines of up to AED 10,000.

But what exactly is a taxable entity? In short, it is any commercial business operating in the UAE, whether or not it meets the taxable threshold, or indeed turns any profit at all.

The FTA defines a commercial business as any entity that “conducts economic activity, whether continuous or short term. It is implied that a business is conducted with a profit motive, and that there is the existence of some system and organisation to the activity conducted. However, a business or business activity does not lose its identity simply because it does not make a profit.”

In short, corporate tax registration is now mandatory for almost all businesses. You cannot and should not wait until your earnings exceed AED 375,000, nor should you expect exemption as a small business. While small business relief is an option for companies with below AED 3m in total revenue, this does not negate the need for registration.

In other words, if you are trading in the UAE, as far as the FTA is concerned, you are a taxable entity – and taxable entities must be registered.

If you are yet to do so, don’t worry. There is still time to comply. The FTA deadlines for companies registered before 1 March 2024 are as follows:

Month of license issuanceRegistration deadline
January or February31 May 2024
March or April30 June 2024
May31 July 2024
June31 August 2024
July30 September 2024
August or September31 October 2024
October or November30 November 2024
December31 December 2024

Any business established after 1 March 2024 must register with the FTA within three months of incorporation.

Steps to register for corporate tax in the UAE

The process of registering for corporate tax in the UAE has been designed with simplicity in mind. In most cases, you can submit your application within 30 minutes via the following three-step process on the FTA website.

Step 1: Register your email and phone number to create an account on the Emaratax portal. This will become your login for all corporate tax affairs on the FTA website.

Step 2: Follow the instructions on the screen to register your business and create a taxable person or persons.
Step 3: Once you have created records for all eligible taxable persons, you will see an option to register for corporate tax. Select this option to complete your registration. You will receive confirmation of your corporate tax registration number within 20 business days.

While applying for your corporate tax registration number is simple, understanding the wider corporate tax process can be complex. That’s why it always pays to seek guidance from an expert such as Creative Zone. Our team is on hand to assist with all your tax and accounting queries, from registration to filing and beyond.

Why work with Creative Zone?

Understanding complex tax laws can feel daunting in any jurisdiction. Here in the UAE, where regulations are still relatively new, it can be even more challenging. When conducting any important business process, it’s vital that you have all information and expert knowledge at your disposal.

Creative Zone offers a broad range of tax and accounting services to help your business maintain sustainable growth and prepare for long-term financial stability.

As well as assisting with tax registration and filing, we can help you streamline your accounting processes so you can easily send invoices, reconcile bank transactions, manage expenses, track inventory, and generate insightful reports effortlessly.

With over 13 years of experience as a leading corporate service provider, our award-winning team is best placed to assist with all matters relating to UAE business setup and operations.

Get in touch today to continue your successful business journey in the UAE with the help of our experts.

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