If you’re a business entity operating in the United Arab Emirates (UAE), staying updated with the latest regulatory changes is crucial to ensure compliance and avoid penalties. At the end of last month, the UAE Ministry of Finance introduced significant updates regarding tax registration, imposing administrative penalties for delays. The UAE Ministry of Finance has approved an administrative penalty of AED 10,000 for delays in UAE Corporate Tax registration. This decision, implemented under Cabinet Resolution No. (10) of 2024, aims to streamline the tax registration process and enforce compliance among businesses operating in the UAE.
UAE Corporate Tax Registration is a mandatory requirement for all businesses, irrespective of VAT registration status, turnover threshold, geographical presence, or financial performance. It’s crucial to note that the deadline for the same is approaching rapidly. To avoid penalties, businesses should register for corporate tax as soon as possible. For those who missed the deadlines or need a refresher on the requirements, here’s a quick overview.
UAE Corporate Tax Registration: Understanding the Amendments
Under the newly introduced amendments, businesses experiencing delays in their corporate tax registration process will face an administrative penalty of AED 10,000. This Corporate Tax penalty will be enforced if the registration is not completed within the specified timelines mandated by the Federal Tax Authority.
What are the deadlines for UAE corporate tax registration?
For UAE Resident Juridical Persons:
The registration deadlines for Juridical Persons (such as LLC, FZCO, FZ LLC, FZE, Private Companies registered with DIFC/ADGM, etc.) residing in the UAE are determined based on the Trade license issue date of taxable persons. In cases where a juridical person holds multiple licenses, the deadline will be determined by the license with the earliest issuance date.
For Natural Persons:
A Resident Individual engaged in a business or business activity during the 2024 Gregorian calendar year or later, with a total turnover surpassing the threshold specified in the applicable tax legislation, must complete registration by the 31st of March of the subsequent Gregorian calendar year.
A person who is not a resident and engages in business or business activities in the 2024 Gregorian calendar year or later, with a total turnover surpassing the threshold outlined in the applicable tax legislation, must fulfill their tax obligations within three months from the date they meet the criteria for being subject to taxation.
For Foreign Entities:
A person incorporated or established under the laws of a foreign jurisdiction, effectively managed, and controlled by the state, must submit its tax registration application within three months following the conclusion of its Financial Year.
UAE Corporate Tax Registration: Additional Guidelines for Different Entities
A juridical, non-resident person that has a permanent establishment prior to the effective date of this decision in the state shall submit a UAE Corporate Tax Registration application within nine months from the date of existence of establishment, and the permanent person that has a nexus in the state within three months from the effective date of this decision.
A juridical, non-resident person that has a permanent establishment on or after the effective date of this decision in the state shall submit a tax registration application, six months from the date of existence of establishment, and the permanent person that has a nexus in the state within three months from the effective date of the nexus.
A juridical, non-resident person that has a permanent establishment prior to the effective date of this decision in the state shall submit a tax registration application within nine months from the date of existence of establishment, and the permanent person that has a nexus in the state within three months from the effective date of this decision.
A legal entity based in the UAE, such as an LLC, FZCO, FZ LLC, FZE, or private companies registered with DIFC/ADGM, that is established on or after March 1, 2024, is required to submit its registration application within three months from the date of incorporation, establishment, or recognition.
The Corporate Tax in the UAE and Free Zone Advantages
The UAE’s introduction of a Corporate Tax regime underscores the significant contribution of Free Zones to the country’s economic development. To support this, the government provides an appealing incentive—a 0% Corporate Tax rate for qualifying Free Zone companies and branches (QFZPs) involved in specified Qualifying Activities and transactions.
Take action now with MS for corporate tax registration.
Regardless of the license issue date, it’s crucial for all entities to initiate the registration process promptly to avoid penalties and ensure compliance with the latest regulations even with the current Transfer Pricing Regulations. Understanding these updates and adhering to the specified deadlines is essential for businesses operating in the UAE. MS can be your partner in this journey to make adherence seamless without any challenges in Corporate Tax Registration. Stay informed, stay compliant, and safeguard your business interests in the dynamic landscape of UAE taxation with MS.
Disclaimer
Please be advised that the fine amounts and dates specified in the register are subject to revisions based on any modifications made to the schedule of contraventions by the UAE authorities. These revisions may arise due to updates in regulatory requirements, policy amendments, or other factors deemed necessary by the UAE Government.