A Step-by-Step Guide to Know How to Register Corporate Tax in UAE

20 Nov 2024

A Step-by-Step Guide to Know How to Register Corporate Tax in UAE

The following is a general understanding of how to register Corporate Tax in UAE that must be followed by all businesses in the country to adhere to federal tax laws. This guide helps you demystify the process of registering corporate tax so that you do not encounter legal and procedural hurdles.

 

From exploring the fundamentals of corporate tax to filing your business tax returns, this post offers practical information for businesses with an aim to fulfill their taxation responsibilities effectively.

 

Understanding UAE Corporate Tax

 

Taxes are gradually becoming an important aspect of the UAE economy. The incidence of corporate taxation is a move in the right direction by helping out the UAE to conform to the rest of the tax systems across the world.

 

As part of measures to formulate a more sustainable and competitive tax regime, it was launched for implementation for business entities’ fiscal years starting from 1st June 2023. This tax was developed to improve the level of fiscal transparency and attract foreign investors owing to the UAE’s image as a business-friendly country.

 

What Are Taxable Profits?

 

Taxable profits refer to the net income generated from business activities within the UAE after deducting eligible expenses. These include revenues from trading, service-based operations, and other commercial ventures conducted in the country. The accurate calculation of taxable profits is vital for businesses to ensure compliance while avoiding penalties.

 

UAE Corporate Tax Rates

 

The UAE’s corporate tax system is progressive and competitive, encouraging growth for small businesses and start-ups while addressing larger-scale corporate operations:

 

  • 0% tax rate: Applies to profits up to AED 375,000, promoting entrepreneurial ventures and small-scale enterprises.
  • 9% tax rate: Levied on profits exceeding AED 375,000, targeting larger corporations and multinational businesses.

 

Exemptions from Corporate Tax

 

The UAE Corporate Tax Law provides exemptions for specific types of income, ensuring businesses can operate more efficiently while avoiding double taxation. Exempt income is not subject to Corporate Tax, and businesses cannot claim deductions for any related expenses incurred in generating this income. However, entities earning exempt income are still liable to pay Corporate Tax on their remaining Taxable Income.

 

Types of Exempt Income

 

  • Dividends and Capital Gains: Income from domestic and foreign shareholdings is generally exempt. This ensures businesses and investors are not taxed twice on earnings derived from these sources.
  • Income from Foreign Permanent Establishments: Resident businesses may elect, under certain conditions, to exclude income earned from a foreign permanent establishment from their UAE Corporate Tax obligations.

 

These exemptions reflect the UAE’s efforts to promote international trade and investment while maintaining fairness in its taxation system. Businesses benefiting from these provisions must still comply with Corporate Tax regulations on other taxable income streams, ensuring transparency and accountability.

 

Do You Need to Know How to Register Corporate Tax in UAE?

 

Not all businesses are required to register for corporate tax. The Federal Tax Authority (FTA) mandates corporate tax registration for entities meeting specific conditions:

 

Who Must Register?

 

  • Companies generating taxable profits from commercial, professional, or industrial activities.
  • Non-resident businesses earning income through UAE-based operations.
  • Freelancers or sole proprietors crossing the AED 375,000 profit threshold.

 

Exemptions and Exceptions

 

The UAE Corporate Tax Law offers a range of exemptions and exceptions to accommodate specific entities and activities, promoting fairness and compliance while fostering economic development. These exemptions are structured into automatic, conditional, and application-based categories, with each group catering to different types of organizations and income sources.

 

Automatically Exempt

 

Certain entities are automatically exempt from Corporate Tax without the need for registration unless they engage in taxable business activities:

 

  • Government Entities: Entities wholly owned and operated by the government for public administration purposes.
  • Extractive Businesses: Businesses involved in extracting natural resources, provided they comply with Emirate-level taxation agreements.
  • Non-Extractive Natural Resource Businesses: These businesses, involved in resource-related activities beyond extraction, also benefit from automatic exemptions.

 

Exempt with Notification

 

Some entities are exempt but must notify the Ministry of Finance (MoF) and meet the relevant conditions:

 

  • Government-Controlled Entities: Entities engaged in mandated activities.
  • Qualifying Public Benefit Entities: Organizations serving the public good, as recognized under the law.

 

Exempt Upon Cabinet Decision

 

Exemptions in this category are conditional on inclusion in a Cabinet Decision and compliance with specified conditions:

 

  • Qualifying Investment Funds
  • Public or Private Pension and Social Security Funds
  • Wholly Owned UAE Subsidiaries of Certain Exempt Persons

 

Understanding whether your business qualifies for an exemption is crucial before proceeding with the registration process. If in doubt, consulting a tax advisor can provide tailored advice for your business category.

 

Preparing for Corporate Tax Registration

 

Proper preparation is crucial to ensure a smooth corporate tax registration process in the UAE. Whether the applicant is an individual or a business entity, the following documentation and steps are required to comply with the Federal Tax Authority (FTA) guidelines.

 

Documents for Natural Persons

 

For applicants who are natural persons, the following documents must be prepared:

 

  • Trade License: Required if the individual operates a licensed business.
  • Emirates ID or Passport: A valid identification document of the applicant.

 

Documents for Legal Persons

 

For corporate entities or legal persons, the necessary documents include:

 

  • Trade License: Proof of the entity’s legitimacy and operations.
  • Emirates ID or Passport of the Authorized Signatory: Valid identification for the individual handling the registration process.
  • Proof of Authorization: Documentation that establishes the authorized signatory’s right to act on behalf of the business.

 

File Format and Size Requirements

 

To ensure successful submission:

 

  • Accepted File Types: Only PDF and Word documents are allowed.
  • File Size Limit: Each document must not exceed 5MB in size.

 

By preparing these documents in advance, applicants can facilitate a seamless registration process while ensuring compliance with UAE Corporate Tax regulations.

 

How To Register Corporate Tax in Dubai

 

Registering for corporate tax in the UAE is a straightforward process when done through the Emaratax portal. Follow these steps to ensure accurate and efficient registration:

 

Step 1: Create an Account or Log In

 

Begin by visiting the Emaratax portal.

 

  • If you are new, register with your email ID and phone number to create an account.
  • Existing users can log in using their registered credentials (ID and password)

 

Step 2: Create or Select Your Taxable Person

 

Once logged in, proceed to create a new taxable person profile.

 

  • Alternatively, if your taxable person details are already available, select the relevant profile from the Taxable Person List.
  • Ensure all details are accurate to avoid delays

 

Step 3: Register for Corporate Tax

 

After selecting the taxable person profile:

 

  • Look for the “Register” option on the portal dashboard to initiate the Corporate Tax registration application.
  • Click on it and fill in the required details to complete the registration process.

 

By following these steps, businesses can ensure a seamless registration experience while adhering to the UAE’s legal requirements.

 

What to Do After Registering for Corporate Tax

 

After registration, staying compliant with corporate tax regulations is essential to avoid penalties.

 

Filing Corporate Tax Returns:

Returns must be filed annually, outlining taxable profits, exemptions, and any deductions. The FTA portal provides a user-friendly interface for filing returns.

 

Tax Payment Methods:

 

Payments can be made via:

 

  • Bank transfers linked to your TIN.
  • Direct payment through the FTA portal.

 

Deadlines and Penalties:

 

  • The due date will be 20 business days from the date of receipt.
  • Late filing or non-payment incurs penalties, which may include fines or legal actions.

 

Timely compliance ensures businesses avoid unnecessary complications, maintaining their reputation and operational efficiency.

 

Conclusion

 

Registering for corporate tax in the UAE is a critical step for businesses to ensure compliance and contribute to the nation’s growing economy. From understanding taxable profits and exemptions to completing the registration process, this guide provides all the essential information.

 

For further assistance, consult the Federal Tax Authority’s resources or engage a tax professional to navigate complex scenarios. By staying informed and proactive, businesses can meet their tax obligations seamlessly and focus on growth.

 

FAQs

 

How to register a business for tax?

 

To register your business for tax in the UAE, create an account on the Emaratax portal. Submit required documents like trade licenses and Emirates ID copies. Fill in the registration form, upload the documents, and complete the process by paying applicable fees.

 

How to activate corporation tax?

 

Activate corporation tax by registering your business on the Emaratax portal. Once registered, select the option to activate corporate tax for your taxable entity. Complete the required details, submit the necessary documents, and confirm the activation through the portal to ensure compliance.

 

How to register a tax identification number?

 

A Tax Identification Number (TIN) is automatically assigned when registering for corporate tax. To register, log in to the Emaratax portal and complete your business registration. Then, the system will generate your TIN, which serves as your unique identifier for tax purposes.

 

How to apply for business tax exemption?

 

Eligible entities, such as government-controlled organizations or public benefit entities, can apply for tax exemptions. Submit an application through the FTA portal with supporting documents, meet the eligibility conditions, and await approval. Check the FTA website for specific exemption criteria and application deadlines.

 

How to register for small business tax?

 

Small businesses earning taxable profits over AED 375,000 must register for corporate tax. Log in to the Emaratax portal, provide required details, submit documentation like trade licenses, and complete the registration process. Businesses under the threshold benefit from a 0% tax rate but still need compliance monitoring.

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