Corporate tax is applied to corporate entities in the UAE like banks, oil companies, and foreign branches. You can check the FTA website or talk to a tax expert to see if your business needs to pay corporate tax.
Steps For UAE Corporate Tax Registration: -
The registration for corporate tax involves several steps as stated below: -
Step 1: Tax Registration Number
The first step is to get a tax registration number (TRN). This is a unique number that the FTA gives to your business for tax purposes. You need this number for all your tax transactions in the UAE. To get a tax registration number (TRN), you are required to fill out an online form by using the Federal Tax Authority (FTA) website. The form requires some basic information about the business, for instance, the name of the company, legal structure, number of trade licenses, and contact details. After you fill out the form, the FTA will review your application and give you a TRN if everything is fine.
Step 2: The documentation for essential registration
Some documents are required for registration. These documents may vary depending on what kind of business you have, but usually they include:
Trade license: - A copy of your trade license that proves that your business is legally authorized to operate in the UAE.
MOA (Memorandum of Association): - The Memorandum of Association (MOA) is an essential document for corporate entities that describes what your company does, who owns it, and how much money it has.
Passport copies: - You need copies of the passports of all the people who own, manage, or sign for your business.
Owner’s Company ID: You also need copies of the ID cards of all the people who own, manage, or sign for your business.
Step 3: Apply for tax registration online
Once you have your TRN and your documents, you can apply for tax registration online. You need to do this through the FTA portal. The portal will ask you to provide some details about your business, such as what it does, how much money it makes, and if it has any special tax situations.
Step 4: Wait for the FTA to approve your application
Upon application submission, await FTA approval, exercising patience during this period. The FTA meticulously reviews your application, ensuring everything is in order. Some additional documents may be required if needed. If they do, make sure to respond to them as soon as possible to speed up the process.
Step 5: Get your TRN for Corporate Tax
When the FTA approves your application, you will get your TRN for Corporate Tax. This is the same number as your TRN for VAT, but it also indicates that you are registered for corporate tax. You can see your TRN for Corporate Tax on the FTA portal. You will also get a tax registration certificate that verifies your registration.
Step 6: File your corporate tax returns
After getting registration for UAE corporate tax, you must file your returns for corporate tax. This is where you report how much money your business made and how much tax you have to pay. The amount of tax you have to pay depends on many factors, such as your business type, activities, and turnover. For correct calculations and payment, the tax consultant can help corporate entities fill out corporate taxes correctly.
Step 7: Pay your taxes on time
The last step is to pay your taxes on time. Timely payments of taxes are required to be paid by the scheduled deadline set by the taxation authority, otherwise, fines, penalties, and interest may be imposed. To avoid this, make sure to pay your taxes on time and keep track of your tax obligations.
Common Errors in Corporate Tax Registration
While seemingly straightforward, the corporate tax registration process comes with common pitfalls that should be avoided to prevent delays, errors, or penalties. Here are some prevalent mistakes to be mindful of:
Failure to Confirm Registration Requirement:
One common mistake is the assumption that if a business is registered for VAT, it doesn't need to register for corporate tax. Always verify on the FTA website or consult with a tax expert to determine if your business necessitates corporate tax registration.
Attempting Tax Registration without TRN:
Some businesses may mistakenly attempt tax registration without obtaining a Tax Registration Number (TRN) first. This is not feasible, as a TRN is a prerequisite for the tax registration process. Ensure you acquire a TRN before initiating the tax registration application.
Inaccurate or Incomplete Application Information:
while filing inaccurate or incomplete information on the application form can lead to issues such as rejection, correction processes, or audits. It is imperative to furnish accurate and complete information on the application form, ensuring alignment with your supporting documents.
Neglecting FTA Requests for Additional Documentation:
Ignoring or delaying responses to the FTA's requests for supplementary documents or information can impede the approval process and lead to frustration. It is essential to promptly respond to FTA requests and furnish the necessary documents to facilitate a smooth process.
Late Filing and Payment of Corporate Tax Returns:
Forgetting or neglecting to file and pay corporate tax returns on time is a critical error that can result in penalties or fines. Always adhere to deadlines, file your returns promptly, and maintain detailed records of your tax transactions.
Concluding the discussion on corporate tax registration in the UAE, the process may seem challenging initially. Yet, with the right guidance and insights, navigating it becomes feasible. Know the eligibility criteria, follow the steps, and steer clear of common pitfalls for legal compliance and financial benefits. Explore the Federal Tax Authority (FTA) website for additional resources on corporate tax registration in the UAE. For precise and updated details, consider consulting corporate tax advisors with expertise in UAE tax laws.
Source: -
- https://mof.gov.ae/wp-content/uploads/2022/12/Federal-Decree-Law-No.-47-of-2022-EN.pdf
- https://mof.gov.ae/corporate-tax/
- https://mof.gov.ae/corporate-tax-faq/
Mostafa is a seasoned Tax Consultant with over 5 years years of experience gained in diverse taxations matters. He has vast expertise in settling tax disputes with the Federal Tax Authority and handling of tax procedures in compliance with tax laws. He is adept in investigating underlying tax intricacies and offering expert tax advisory. He is also well-versed in conducting tax analysis’s and negotiations with the Tax Regulators, upon tax preparation and filing. Mostafa specializes in the areas of Tax law, Auditing, Accounting and Banking law.
