Corporate Tax Registration in UAE: A Comprehensive Guide
UAE has rolled out corporate tax to meet international tax standards and spur economic growth. Companies doing business in the country are now required to adhere to corporate tax rules by registering with the Federal Tax Authority (FTA). Here is all you should know about corporate tax registration in UAE, including its significance, process, and advantages.
What is Corporate Tax?
Corporate tax is a direct tax levied on the net earnings or profit of companies. The corporate tax system in the UAE is structured to promote economic diversification and tax harmony with international standards. The default corporate tax rate under the UAE corporate tax system is 9% for taxable profits over AED 375,000, with such profits under this ceiling exempt from taxation.
Who Must Register for Corporate Tax?
All companies in the UAE are required to determine if they are in the corporate tax regime. The following have to register:
- UAE incorporated companies carrying on business activities.
- Free zone companies (subject to qualifying conditions).
- Offshore companies with a permanent presence in the UAE.
- Any person conducting business activities above the taxable income limit.
Exempt Entities
Some entities are exempt from corporate tax, such as:
- Government institutions and subsidiaries.
- Charities that are registered under UAE law.
- Public benefit organizations.
- Certain investment funds meeting specific conditions.
How to Register for Corporate Tax in the UAE?
The process of corporate tax registration in Dubai and the UAE is straightforward and can be completed online via the Federal Tax Authority’s (FTA) EmaraTax portal. Here are the steps to follow:
Step 1: Create an Account on EmaraTax
Businesses must first create an account on the FTA’s EmaraTax portal and log in using their credentials.
Step 2: Submit Required Information
Businesses are required to submit the following information for tax registration:
- Copy of trade license
- Financial statements of the company
- Memorandum of Association (MOA)
- Passport copies of business owners/shareholders
- Emirates ID copies of business owners/shareholders
- Business activity details
Step 3: Get a Tax Registration Number (TRN)
When the application is approved, businesses will be issued a Tax Registration Number (TRN), which is required for all tax transactions.
Step 4: Remain Compliant
Upon getting the TRN, companies need to file periodic tax returns and adhere to all corporate tax requirements to evade fines.
Advantages of Corporate Tax Registration
UAE corporate tax registration has various benefits:
1. Compliance with UAE Laws
Non-registration of corporate tax is subject to hefty fines and judicial action. Being registered properly will make businesses conduct business in compliance with the regulatory framework of the UAE.
2. Boosts Business Credibility
Being a tax-compliant business builds business credibility and trust, thus making it simple to attract partners and investors.
3. Evades Financial Penalties
Non-compliant businesses are penalized by the UAE. Timely registration for corporate tax avoids unnecessary penalties and expenses.
4. Enhances International Trade
Most international businesses find it easier to deal with tax-compliant businesses, hence registering for corporate tax is useful when expanding operations overseas.
Corporate Tax Filing and Compliance
After registration, companies are required to meet tax filing deadlines and corporate tax compliance. Some of the major requirements are:
Keeping Proper Financial Records: Companies are required to maintain proper books of accounts to facilitate tax filings.
Filing Corporate Tax Returns Annually: Firms are required to file corporate tax returns within the stipulated period.
Payment of Corporate Tax on Time: Any payable tax should be paid on time to escape penalties.
Penalties for Non-Compliance
Companies that do not adhere to corporate taxation rules are subjected to stringent penalties, including:
- Delayed registration – AED 10,000 fine.
- Late submission of tax returns – penalties calculated according to the duration of delay.
- Invalid tax submissions – further fines by the FTA.
Conclusion
Corporate tax registration Dubai and the UAE is an important step for corporations to stay in line with UAE tax regulations. Following the registration process, keeping accurate financial accounts, and meeting tax filing requirements, companies can keep themselves out of trouble and have trouble-free business operations.
To avail professional help with corporate tax registration and compliance, hiring expert tax professionals can facilitate a smooth process and ensure complete compliance with UAE regulations.
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