Demystifying Corporate Tax in the UAE
In this article, we'll unravel the complexities of Corporate Tax in the UAE, covering everything from deadlines and rates to exemptions, along with the assistance available from Crown Capital.
In recent announcements, the UAE has introduced new deadlines for corporate tax registration, effective from March 1. To avoid penalties, businesses must understand these deadlines based on their licence issuance month. With fines of up to Dh10,000 ($2,722) looming, compliance is crucial.
New deadlines
For companies incorporated before March 1, specific deadlines apply for corporate tax registration this year. Understanding these deadlines is vital to avoid legal repercussions. Moreover, businesses established after March 1, including those in free zones, must register within three months of incorporation.
Navigating corporate tax rates is another critical aspect. With a standard statutory rate of 9%, businesses need to ensure compliance with thresholds to avoid taxation.
Crown Capital offers expert guidance on understanding and managing tax rates effectively.
Resident Juridical Persons (including free zone persons) who were incorporated, established, or recognized before March 1, 2024
| Month of License Issuance | Deadline to apply for Corporate Tax Registration |
|---|---|
| January or February | 31 May 2024 |
| March or April | 30 June 2024 |
| May | 31 July 2024 |
| June | 31 August 2024 |
| July | 30 September 2024 |
| August or September | 31 October 2024 |
| October or November | 30 November 2024 |
| December | 31 December 2024 |
| In the case if a Juridical Person does not have a license | 3 Months from March 1, 2024 |
Resident Juridical Persons (including free zone persons) established or recognized on or after March 1, 2024
| Category of Juridical Persons | Deadline for Tax Registration |
|---|---|
| A person incorporated, established or recognised under the applicable legislation of another country or foreign territory, and who is effectively managed and controlled in the UAE. | 3 months from the end of the person’s financial year. |
| A person incorporated or otherwise established or recognized under the applicable legislation in the UAE, including a Free Zone Person. | 3 months from the date of incorporation, establishment, or recognition |
Non-Resident Juridical Persons Before March 1, 2024
| Category of Juridical Persons | Deadline for Tax Registration Application |
|---|---|
| A person who has a permanent establishment in the country. | 9 months from the date of starting the permanent establishment |
| A Non-Resident Juridical person with a nexus in the UAE. | 3 months from March 1, 2024. |
Non-Resident Juridical Persons on or after March 1, 2024
| Category of Juridical Persons | Deadline for Tax Registration Application |
|---|---|
| A person who has a permanent establishment in the country. | Within a period not exceeding 6 months from the date of starting the permanent establishment. |
| A Non-Resident Person with a nexus in the UAE. | Within a period not exceeding 3 months from the date of establishing the relationship. |
Natural Persons Conducting Business or Business Activity
| Category of Natural Persons | Deadline for Tax Registration Application |
|---|---|
| A resident natural person who runs a business or carries out business activity during the calendar year 2024 or subsequent years, and whose total turnover generated for each Gregorian calendar year exceed the limit specified in the relevant tax legislation | March 31 of the following Gregorian calendar year |
| A non-resident natural person who runs a business or carries out business activity during the Gregorian calendar year 2024 or subsequent years and whose total turnovers generated exceed the limit specified in the relevant tax legislation. | 3 months from the date of fulfilling the conditions set out to determine taxable persons. |
Important Notice!
The decision mandates the imposition of administrative penalties on taxpayers failing to submit their registration applications for Corporate Tax within the specified deadlines outlined in the FTA’s decision for each segment of taxable individuals, as per Cabinet Decision No. 75 of 2023 regarding Administrative Penalties concerning the implementation of Federal Decree-Law No. 47 of 2022 on Corporate and Business Taxation and its subsequent amendments.
What is the tax rate?
The UAE Ministry of Finance’s clarification on taxation thresholds further underscores the importance of accurate financial reporting. Crown Capital can help businesses ensure compliance, particularly regarding taxable income exceeding Dh1 million.
Who is exempt?
Exemptions play a crucial role in corporate tax planning. Entities operating in strategic sectors or falling under specific categories may qualify for exemptions.
Crown Capital’s expertise can help identify these opportunities, maximising tax efficiency for your business.
Small businesses with revenue below Dh3 million can benefit from a corporate tax relief program.
Understanding eligibility criteria and navigating the application process is simplified with Crown Capital’s assistance.
How does the UAE's corporate tax compare to global finance centres?
In comparison to global financial centres, the UAE’s competitive corporate tax rate of 9% positions it favourably. This favourable tax environment encourages business investment and growth.
Crown Capital provides the necessary support to leverage these advantages effectively.
Conclusion
In conclusion, navigating corporate tax regulations in the UAE requires a comprehensive understanding of deadlines, rates, exemptions, and available assistance.
Crown Capital offers tailored solutions to ensure compliance and maximize tax efficiency, enabling businesses to thrive in the dynamic UAE business landscape.
