Corporate Tax Registration in UAE: All You Need to Know

In January 2022, the Ministry of Finance made a significant announcement about the upcoming implementation of a federal Corporate tax (CT). This tax will be levied on the profits earned by businesses. The tax will go into effect either on 1 June 2023 or 1 January 2024, depending on the financial year followed by each business. It’s important to note that the Corporate tax will be applied uniformly across all the emirates.

What is Corporate Tax (CT)?

Corporate tax is a direct tax imposed on the profit or income earned by corporations and similar entities through their business activities. In certain jurisdictions, Corporate Tax may also be referred to as “Corporate Income Tax” or “Business Profits Tax.”

The objectives of introducing corporate tax in the UAE are as follows:

1. Strengthen the UAE’s position as a top global center for business and investment.
2. Speed up the country’s development and progress in line with its strategic goals.
3. Confirm the UAE’s dedication to meeting international standards for tax transparency and preventing unfair tax practices.

Application of UAE Corporate Tax: Where Does it Apply

The Corporate Tax (CT) will apply to the following:

1. All businesses and individuals engaged in commercial activities under a valid license in the UAE.
2. Free zone businesses will also fall under the CT regime, while still receiving any existing CT incentives if they comply with regulatory requirements and do not conduct business activities outside the UAE’s mainland.
3. Foreign entities and individuals will be subject to CT only if they conduct regular or ongoing trade or business operations within the UAE.
4. Banking operations will be included in the scope of CT.
5. Businesses involved in real estate management, construction, development, agency, and brokerage activities will also be subject to CT.

Who is Exempt from UAE Corporate Tax?

1. Natural Resource Extraction Businesses: Businesses involved in the extraction of natural resources will be exempt from Corporate Tax. These businesses will continue to be subject to the existing Emirate-level corporate taxation.
2. Dividends and Capital Gains: UAE businesses will be exempt from Corporate Tax on dividends and capital gains earned from their qualifying shareholdings.
3. Qualifying Intra-Group Transactions and Reorganizations: Certain intra-group transactions and reorganizations meeting specific conditions will be exempt from Corporate Tax. These exemptions apply as long as the necessary requirements are fulfilled.

Further Exemptions from UAE Corporate Tax:

1. Individual Employment Income: Corporate Tax will not apply to an individual’s salary and other employment income, whether received from the public or private sector.
2. Individual Bank Deposits and Savings: Interest and other income earned by individuals from bank deposits or savings schemes will be exempt from Corporate Tax.
3. Foreign Investor’s Income: Income earned by foreign investors from dividends, capital gains, interest, royalties, and other investment returns will not be subject to Corporate Tax.
4. Personal Real Estate Investment: Corporate Tax does not apply to individuals’ personal investments in real estate.
5. Individual Shareholdings and Securities: Dividends, capital gains, and other income earned by individuals from owning shares or other securities in their personal capacity are exempt from Corporate Tax.

Who needs to Register for Corporate Tax in UAE?

According to the Ministry of Finance, the CT rates are as follows:

• 0% for taxable income up to AED 375,000.
• 9% for taxable income exceeding AED 375,000.
• A separate tax rate (yet to be specified) will be applicable to large multinational companies that meet specific criteria aligned with ‘Pillar two’ of the OECD Base Erosion and Profit Shifting Project.

The Federal Tax Authority (FTA) will take on the responsibility of managing, collecting, and ensuring compliance with the Corporate Tax (CT). In the near future, the FTA will provide additional resources and guidance related to corporate tax. These references and guides will be made available on their website, offering information on registration, filing returns, and other necessary procedures.

Documents Needed for UAE Corporate Tax Registration

To register for Corporate Tax in the UAE, businesses are required to submit specific documents. The registration process can be completed online. The following documents are necessary for Corporate Tax Registration in the UAE:

1. Copy of the valid Trade License.
2. Passport copies of the owner(s)/partners associated with the license (valid and not expired).
3. Emirates ID copies of the owner(s)/partners associated with the license (valid and not expired).
4. Memorandum of Association (MOA) or Power of Attorney (POA).
5. Contact details of the concerned person (mobile number and email address).
6. Company’s contact details, including complete address and P.O. Box.
7. Corporate Tax Period information.

Corporate Tax Registration Services in UAE

Spider Business Consultancy provides efficient and top-notch corporate tax registration services in UAE. If you require assistance with obtaining a Corporate Tax Registration Number, feel free to contact us. Our team of experienced corporate tax advisors is well-versed in the laws and regulations governing corporate tax in the UAE. We can assist your business in navigating potential challenges, such as unfamiliarity with corporate tax laws, ensuring proper structure, and maintaining compliance.

FAQs on: UAE Corporate Tax

Why is the UAE introducing CT?

The UAE is introducing Corporate Tax (CT) for several reasons:

1. Enhancing Global Business and Investment Status: By implementing a competitive CT regime aligned with international best practices, the UAE aims to solidify its position as a top destination for business and investment worldwide.
2. Driving Development and Transformation: CT is anticipated to expedite the UAE’s development and transformation, facilitating the achievement of its strategic objectives and fostering economic growth.
3. Ensuring Tax Transparency: Introducing CT underscores the UAE’s commitment to meeting global standards of tax transparency. It serves as a demonstration of the country’s dedication to preventing unfair tax practices and promoting a transparent business environment.

Do I need to register for Corporate Tax in UAE?

In accordance with the UAE Corporate Tax law and relevant implementing regulations, it is mandatory for all eligible entities to register for Corporate Tax in the UAE and obtain a Corporate Tax Registration Number.

How can I register for corporate income tax in UAE?

You can complete the corporate income tax registration in the UAE through an online process. To initiate this procedure, you will need to provide the following essential documents:

1. A copy of your valid Trade License (which should not be expired).
2. Passport copies of the owner(s) or partners who hold the license, ensuring that the passports are not expired.

What is the fee for Corporate Tax registration in UAE?

The cost for Corporate Tax registration in the UAE is determined by the business’s legal structure. Typically, it can range from AED 1,500 to AED 3,500, with an additional 5% VAT. The Federal Tax Authority (FTA) typically approves registration within 3 to 5 working days once all required documents are submitted.

What is the last date for Corporate Tax registration in UAE?

With the financial year concluding on May 31st, the Corporate Tax Law takes effect starting from June 1, 2023. As a result, the inaugural tax period spans from June 20, 2023, to May 31, 2024. The deadline for filing the corresponding tax return is February 28, 2025.

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