Who is eligible for corporate tax in UAE?
As per Federal Decree-Law No. 47 of 2022, taxable persons are required to register for UAE corporate tax, unless exempted under specific circumstances stated in the corporate tax regulations. Even if eligible for tax exemption under clause 1 of article 4 of the decree-law or as an applicable unincorporated partnership, relevant persons or entities must still register for corporate tax and obtain a tax registration number (TRN) to be eligible for the exemption.
Process for UAE Corporate Tax Registration
The process of corporate tax registration in UAE starts with corporations registering their trade license with the Federal Tax Authority (FTA) to obtain a TRN. This involves completing an online registration form and submitting necessary documents such as the trade license and articles of incorporation. Once registered, businesses receive a TRN, which must be used for all tax-related documents and filings.
Key Elements of Corporate Tax Registration in the UAE:
For corporate tax registration purposes, there are distinct essential components that Taxable Persons must consider. These elements ensure compliance with the UAE's tax regulations and facilitate smooth tax operations. Below are the key components:
Taxable Entities: Companies operating in the UAE must determine their tax liability based on their legal structure and activities. Entities subject to corporate tax include limited liability companies,
partnerships, branches of foreign companies, and free zone companies (unless exempted).
Tax Registration: Businesses that meet the criteria for corporate tax must register with the UAE Federal Tax Authority (FTA). The registration process involves providing accurate information about the
company, such as trade license details, ownership structure, financial records, and contact information.
Taxable Period: The FTA specifies the taxable period for each registered entity, usually based on the company's fiscal year. It is crucial to maintain accurate accounting records and ensure timely filing and payment of taxes within the designated period.
Taxable Profit Calculation: Registered businesses must calculate their taxable profit using the guidelines provided by the FTA. This involves applying the applicable tax rate to the net profit derived from the company's activities after making necessary adjustments, deductions, and exemptions allowed under the UAE tax laws.
Tax Returns and Payments: Companies must file their tax returns with the FTA within the prescribed time frame. This involves submitting the required forms, statements, and supporting documents
detailing the income, expenses, and tax liabilities. Any tax payable must be settled within the specified deadline to avoid penalties and fines.
Accounting and Record-Keeping: Maintaining accurate accounting records and supporting documents is crucial for corporate tax compliance. Businesses should retain financial statements, invoices, receipts, bank statements, and other relevant records for at least five years from the end of the taxable period.
Auditing Requirements: Depending on their turnover and other criteria, companies may be required to have their financial statements audited by an approved auditor. The FTA may request these audited financial statements during tax assessments or investigations.
Penalties and Compliance: Non-compliance with tax obligations can result in penalties and fines imposed by the FTA. It is essential for businesses to stay updated on tax regulations, fulfill their filing and payment obligations, and promptly respond to any inquiries or audits conducted by the tax authorities.
Seek the expert services of Tax Consultants in UAE
To ensure proper compliance with the Corporate Tax Law, mitigate risks, and effectively implement corporate tax, it is advisable for taxable persons to consult tax consultants in UAE. Corporate Tax UAE.
A trusted Tax Consultant in UAE is committed to assisting Taxable Persons to meet tax obligations and ensuring compliance with the Federal Tax Authority's regulations and standards. Therefore, contact us today and we shall be glad to assist you.