Corporate tax registration is an important part of running a successful business in the UAE. To ensure seamless operations and to make the most of the region’s relaxed tax policies, every business needs to understand how to register for corporate tax in the UAE.
Ever since the introduction of the corporate tax system in 2023, every business operating in the region is required to register for this tax. However, most businesses have no idea how this registration process works.
Failing to file corporate tax returns on time can result in fines and even license cancellation. To avoid these issues, you need to stay on top of your corporate tax responsibilities.
This blog covers the detailed process for corporate tax registration in the UAE. Using this information, you can easily register for this tax and save yourself both time and trouble.
- Understanding Corporate Tax in the UAE
- Who Must Register for Corporate Tax in the UAE?
- Exemption from the Corporate Tax
- Corporate Tax Rate
- How to Register for Corporate Tax in UAE: Step-By-Step Process
- Common Mistakes to Avoid When Registering for Corporate Tax in the UAE
Understanding Corporate Tax in the UAE
The corporate tax is the direct tax on the net income of businesses that operate anywhere in the UAE.
The Ministry of Finance in the UAE introduced the corporate tax law in 2022 to fully implement it in the financial year 2023. The FTA’s Federal Decree Law 47 states that every taxable business, including those in the free zone, must register for corporate tax and get a tax registration number (TRN).
After registration, these entities will pay tax at a standard rate of 9% if their taxable income exceeds the AED 375,000 threshold. If the taxable income of a business is below this threshold, it will be charged with 0% corporate tax.
Who Must Register for Corporate Tax in the UAE?
If your business falls into the taxable category under the UAE corporate tax policies, you must register for corporate tax. Every business that earns more than AED 375,000 annually must register for this tax on a mandatory basis.
The following are the main entities that must register for corporate tax:
- Businesses in the UAE mainland
- Freezone businesses conducting business with the mainland
- Banking and financial institutions
- Foreign entities with permanent UAE offices
- Companies or entities that are managed and controlled within the UAE
Exemption from the Corporate Tax
Some businesses in the UAE are exempt from corporate tax. Though FTA requires such businesses to register for corporate tax or value added tax, they are subject to a 0% tax rate.
Following are some exemptions from the corporate tax in the UAE:
- The salary of the employee
- Income from shares, dividends, or capital gains earned in a personal capacity
- Entities involved in the extraction of natural resources
- Intra-group transactions or reorganizations
- Real estate investments
Corporate Tax Rate
The Federal Decree-Law No. 47 of 2022 of the UAE states that every taxable entity whose income exceeds AED 375,000 annually must pay corporate tax at the rate of 9%.
Companies whose taxable income is below AED 375,000 and the ones that operate in the UAE free zones are subject to a 0% tax rate. In the case of free zone companies, they must meet the Qualifying FreeZone Person criteria and possess qualifying income if they are to be taxed at a 0% rate.
How to Register for Corporate Tax in UAE: Step-By-Step Process
Following is the detailed step-by-step process for corporate tax registration in the UAE:
- Gather required documents such as trade licenses, financial statements, company information, bank account information, contact details, passport and ID copies of owners, authorized signatories, shareholders, and directors.
- Access the Emaratax portal from the FTA website and register for a new account.
- Login to the portal with your accurate credentials. You will see all taxable entities linked to your account on the dashboard.
- If there are no taxable entities, you can add a new one to proceed.
- Click on “Register for Corporate Tax” to begin.
- Add entity details like entity type, i.e., mainland business, free zone company, etc., and trade license number, legal structure, and registration number.
- Click on “Add Business Activities” and then enter the details about the specific activities conducted under your trade license.
- Entities whose 25% or greater stake is owned by certain individuals must enter the complete ownership details.
- Businesses that have more than one branch, must add the trade license as well as the business activities of each branch.
- Add your business address, phone number, email, and other contact details.
- Add details like IDs and passport details of persons who are authorized to sign tax papers on your behalf. You must add the correct details of the authorized signatories as well as relevant proof of authorization.
- After filling out the information, review the entire application carefully. Then tick the declaration box to proceed.
- Finally, you can submit the registration form by clicking on the “Submit” button.
After submission, the FTA will review your application to ensure the details you have provided are all accurate. You can expect to get a confirmation email for the corporate tax registration along with a TRN in 20 business days.
Common Mistakes to Avoid When Registering for Corporate Tax in the UAE
Following are some of the most common mistakes that you must avoid to ensure accurate corporate tax registration in the UAE:
- Not registering for the corporate tax on time.
- Entering incomplete or incorrect details of your business.
- Not paying attention to proper record-keeping or documentation.
- Not claiming tax incentives or tax deductions.
- Not seeking assistance from corporate tax professionals.
Conclusion
Most businesses find it hard to navigate the complex process of corporate tax registration in the UAE. Not paying attention to deadlines, financial record keeping, and proper filing of returns are just a few ways these businesses mess up the process and suffer a great deal.
However, with proper due diligence and a proactive approach, it is possible to handle your corporate tax responsibilities better and avoid issues like operational disruptions or fines.
Businesses can further streamline their tax registration and financial management processes by seeking help from tax professionals. These experts facilitate timely and accurate tax filing, thus ensuring full compliance.
You can visit us at HRSG to get the best corporate tax, VAT, and accounting services for your businesses all over the UAE.
