Corporate Tax Registration Deadlines for UAE Free Zone Companies

UAE Corporate Tax law declares that Registration for corporate entities is mandatory including Free Zone entities. As per the new cabinet decision No. 3/2024, business entities that are incorporated on or after 1st March, whether they are free zone entities or mainland have three months from their recognition, incorporation, or establishment to get registration for UAE corporate tax. The UAE has undergone significant changes in Federal Decree Law No. (47) of 2022-related administrative fines are outlined in the most recent Cabinet Resolution No. (10) of 2024, which also updates previous requirements. Businesses must thus exercise caution because failing to register for corporate tax by the deadline now carries a stiff AED 10,000 charge. The Federal Tax Authority (FTA) is sending out a strong message that tax compliance needs to take a serious turn, matching the penalties for other taxes like excise and VAT.

Free Zone Corporate Tax Rates in the UAE

In the United Arab Emirates, corporate tax rates range from 0% to 9% for all businesses. Companies operating in free zones that engage in qualifying activities pay a tax rate of 0% on qualifying income and 9% on non-qualifying revenue. It's critical to comprehend the free zone company's commercial license to determine if its revenue will be 0% or 9%. All free zone businesses must, however, register with the FTA and submit a tax return.

• The UAE Tax climate is different for companies operating within Free Zones::
  • A 0% corporate tax rate applies to the qualifying income of businesses designated as a Qualifying Free Zone Person (QFZP).
  • Non-qualifying income earned within the Free Zone is taxed at a 9% rate, though other exemptions or relief might be available.
• The revised tax structure impacts all entities operating within the UAE, including international businesses with local offices.

Corporate Tax Pre-registration Initiated by the Federal Tax Authority in the UAE

Treatment To Incorporated Resident Juridical Persons  Before 1st  March 2024

For companies incorporated before March 1, 2024, the tax registration deadlines vary based on the issuance date of their licenses. Let’s dive into the specifics:

1. January or February License Issuance:

   • If the license of your business entity was issued in the first two months i.e. January/February, May 31, 2024 is the deadline for registration application for corporate tax.

2. March or April License Issuance:

   • Companies with licenses issued in March or April must complete their tax registration by May 30, 2024.

3. June or July License Issuance:

   • The deadline for companies with licenses issued in June or July is June 30, 2024.

4. August or September License Issuance:

   • Companies whose licenses were issued in August or September should register by July 31, 2024.

5. October or November License Issuance:

   • Finally, licenses issued in October or November must be registered by August 31, 2024.

 

Table 1: Tax Registration Deadlines for Resident Companies by License Date

Date of license issuance	Deadline to submit tax registration
January 1 - January 31	May 31, 2024
February 1 - February 28/29	June 30, 2024
March 1 - March 31	June 30, 2024
April 1 - April 30	July 30, 2024
May 1 - May 31	July 31, 2024
June 1 - June 30	August 31, 2024
July 1 - July 31	September 30, 2024
August 1 - August 31	October 31, 2024
September 1 - September 30	October 31, 2024
October 1 - October 31	November 30, 2024
November 1 - November 30	November 30, 2024
December 1 - December 31	December 31, 2024
No commercial license	Within 3 months of decision

Registration Deadline for Established/Recognized Resident Juridical Entities I.E. Freezone After 1st March 2024

If your company falls into this category (established or recognized on or after March 1, 2024), the tax registration deadline depends on the type of juridical person:

1. Entities Recognized/Established/Incorporated Under Foreign Legislation: -

• In case your business entity is recognized/incorporated/established under the legislation of another state or any foreign jurisdiction though controlled and managed effectively in the UAE, the mandatory registration deadline is set within three months from the conclusion of the financial year of the said entity.

2. Person Incorporated or Established Under UAE Legislation (Including Free Zone Persons):

• In the context of UAE legislation, which encompasses entities incorporated or recognized under it (including Free Zone Persons), there exists a mandatory timeframe of three months within which these companies must fulfill certain requirements. This period commences from the date of their incorporation, establishment, or recognition.

Read more:  Conditions to Qualify as a Free Zone Person

Non-Resident Juridical Persons

The registration time limitation for non-resident juridical entities is different on the timeline basis:

1. Before 1st March 2024:
   • Regarding Businesses that Have a UAE Permanent Establishment (PE): If your business has a PE, you have nine months from the PE's creation date to file an application for tax registration.
   • Alternatively, the deadline is three months beginning on March 1, 20241, if your organization has a connection before March 1, 2024.
2. After 1st March 2024:
   • Companies with a permanent establishment in the UAE should register within a period not exceeding 6 months from the date of starting the permanent establishment.
   • The corporate entities with UAE nexus in the UAE, that are required to incorporate should be within three months from the date of the the relationship establishment.

Natural Persons Conducting Business

Don’t forget about natural persons conducting business or business activity:

1. Resident Natural Persons:
   • If your total turnover exceeds the specified limit during the calendar year 2024 or subsequent years, apply for tax registration by March of the following Gregorian calendar year.
2. Non-Resident Natural Persons:
   • Non-resident natural persons running a business during the same period should also register within the same timeframe.

Read More: Impacts of corporate tax uae 2024 free zone entities

Filing of Tax Returns

The first "tax period" for which a business must file a corporation tax return is June 1, 2023, for financial years beginning on or after that date. "Within nine months following the conclusion of their tax period, companies must file their corporate tax return. For instance, a business whose fiscal year runs from January 1 to December 31 will have its first tax period from January 1, 2024, to December 31, 2024. After then, the tax return for this tax year must be submitted by September 30, 2025, at the latest. Businesses whose tax periods end on June 30, 2024, must file their maximum tax returns by March 31, 2025, and entities whose tax periods end on December 31, 2024, must file their corporate tax returns by September 30, 2025.

• Businesses won't be obliged to make advance tax payments or file more than one corporation tax return for each tax quarter.
• Corporate tax returns will only need to be filed once for each tax period; provisional tax returns or advance tax payments will not be needed," the statement reads.
• The relevant tax period must finish and the tax return must be filed within nine months of that date.

All Companies whether operating in mainland areas and free zones must adhere to the provisions of Federal Decree-Law No. (47) of 2022. corporate tax Penalties for non-compliance are outlined in Cabinet Decision No. (75) of 2023 read with Cabinet’s Decision 3/2024 or Cabinet Decision No.10/2024. Having accurate accounting records is a crucial need that businesses must remember since it will serve as the foundation for their yearly tax return filing, the speaker stated. Stay informed, meet the deadlines, and ensure smooth operations for your free zone company in the UAE.