In a recent announcement, the Federal Tax Authority (FTA) announced the launch of early corporate tax registration in UAE through the EmaraTax platform. This announcement is in keeping with the Authority's commitment to offering digital tax services to businesses and members. This action is in accordance with Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, which specifies that taxable persons will be subject to corporate tax in UAE in their first financial year that begins on or after June 1, 2023.
Early Corporate Tax Registration in UAE: A Step Towards Digital Tax Services
The UAE's Corporate Tax registration begins in early 2023. For businesses with a tax period starting in June 2023, registration must be done within 26 months, and the first tax return is due by February 2025. After registration, businesses have up to nine months after their tax period ends to file returns and pay the tax to the Federal Tax Authority.
Corporate Tax Registration Deadlines for UAE Free Zone Companies
Phase 1 of Registration: January to May 2023
During this initial phase, selected UAE-based companies will be invited for early registration through email and SMS. This selection aims to streamline the process for businesses with financial years commencing on or shortly after June 1, 2023. The FTA emphasizes the use of international best practices to offer flexible compliance mechanisms, ensuring a seamless registration experience.
Ensuring Efficient Tax Implementation
Under the leadership of Khalid Ali Al Bustani, the FTA focuses on enhancing administrative procedures to support the business sector effectively. The aim is to maintain the UAE's competitiveness by introducing a corporate tax regime that is among the world's most favorable, reinforcing the government's strategy to diversify its revenue sources.
Competitive Corporate Tax Regime
The corporate tax UAE regime, with only a nine per cent levy from June 1, 2023, will be among the most competitive in the world. The corporate tax on business profits above Dh375,000 ($102,110) will help diversify government revenue away from the oil sector and broaden the government's revenue base.
Eligibility Criteria for Corporate Tax Registration in the UAE
In the opinion of reputable Tax Advisors, corporate tax registrations in UAE will be distinct from VAT registrations. Regardless of whether their taxable income is below the threshold of Dh375,000 per annum or if they are exempt, all businesses, including free zones and companies, must register.
As of now, businesses do not have to register for corporate tax UAE unless they receive an 'invitation to register' during the January-May period. No penalties relating to registration may be imposed if businesses ensure to register at least before the due date for tax return submission (i.e. nine months from the end of the relevant financial year).
Businesses with a commercial license and taxable income will be subject to corporation tax when they operate as sole proprietorships or sole corporations. To implement the new levies in the country, the new tax regime allows for a generous compliance period.
With a financial year starting on June 1, 2023, and ending on May 31, 2024, businesses will have until February 28, 2025, to file their tax returns and make payments.
In due course, the FTA will provide more information on corporate tax registration, and the following link will provide information about the Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses: https://mof.gov.ae/wp-content/uploads/2022/12/Federal-Decree-Law-No.-47-of-2022-EN.pdf
About Federal Tax Authority:
In 2016, the Federal Tax Authority (FTA) was established by Federal Decree-Law No. (13) of 2016 in order to promote economic diversity and enhance non-oil revenue in the UAE. As per international best practices and standards, the Authority is responsible for administering and collecting federal taxes. The FTA aims to coordinate efforts with relevant entities to establish a comprehensive, fair, and technologically advanced tax system. The purpose of this project is to position the UAE as a world leader in the implementation of a fully digital tax system that prioritizes voluntary compliance and ease of use for taxpayers. This includes a streamlined process for registration, submission of tax returns, and payment of taxes, which can all be accomplished through the Authority's website: www.tax.gov.ae. Through the entire tax process, the FTA ensures the highest levels of transparency and accuracy.
Reference: pre-registration for corporate tax through the EmaraTax
Abrar Ahmad holds a Master’s as well as an MPhil in Finance and has an extensive experience of 10+ years in managing all aspects of Taxation, VAT Consulting and Accounting. He also carries with him a working knowledge of corporate tax and has helped drive value and growth to the businesses of numerous clients.
