Corporate TAX Registration in the UAE
The United Arab Emirates (UAE) has long been a preferred destination for businesses seeking to establish a presence in the Middle East. Its favourable tax regime, strategic location, and world-class infrastructure make it an attractive option for companies across various industries. One key aspect of doing business in the UAE is understanding the corporate tax registration process and the implications for businesses operating in Dubai.
Overview of Corporate Tax in the UAE has introduced to diversify its economy and reduce reliance on oil revenues. As of June 2023, the UAE levies a corporate tax on the net profits of businesses. This tax applies to most types of businesses, including those in free zones and mainland areas. However, certain sectors, such as oil and gas, may be subject to different tax rates and regulations.
Corporate Tax Registration Process
Dubai Business Tax
Dubai, one of the emirates of the UAE, follows the federal corporate tax regime. Businesses operating in Dubai must adhere to the same corporate tax regulations as those in other emirates. However, Dubai provides extra incentives and benefits to attract businesses, including free zones with unique tax advantages.
Free Zone Benefits:
Dubai’s free zones are designated areas where businesses can enjoy tax exemptions, full foreign ownership, and simplified regulations. Companies registered in free zones benefit from a 0% corporate tax rate on profits earned from activities conducted within the zone. However, they must ensure that their activities do not extend to the mainland to maintain this benefit.
Double Taxation Treaties:
The UAE has entered into double taxation treaties with numerous countries, including key trading partners. These treaties prevent businesses from being taxed twice on the same income, providing further relief to businesses operating in Dubai and enhancing the emirate’s attractiveness as a global business hub.
Company Registration and Company Tax Registration
Company registration in the UAE involves establishing a business entity within one of the country’s various jurisdictions, including the mainland, free zones, or offshore. Choosing an appropriate legal structure and commercial activity such as a Limited Liability Company (LLC), Free Zone Company, or Branch Office—is the first step in the process. In addition to preparing the required legal paperwork, obtaining preliminary approvals from the right authorities, and paying registration fees, entrepreneurs also need to select a suitable trade name. With 100% foreign ownership, tax exemptions, and other benefits, free zones offer a simplified approach.
Company tax registration in the UAE is a vital step following the initial company registration. Although the UAE is known for its favourable tax environment, with no corporate tax on most entities, companies must still comply with the Federal Tax Authority (FTA) regulations. Companies that produce oil and gas or operate international bank branches are among the businesses that must pay corporate tax. Also, if a company’s taxable exports and suppliers reach the required yearly register threshold, it must sign up for Value Added Tax, or VAT. A Tax Registration Number (TRN), which is necessary for collecting and sending VAT to the FTA, must be obtained as part of the VAT registration procedure.
FTA Tax Registration Overview
In the UAE, federal taxes such as VAT and Excise Tax are overseen by the Federal Tax Authority (FTA). Companies that generate more than AED 375,000 in revenue annually are required to register online with the FTA.