Guide to Corporate Tax Registration and Return Filing in the UAE

Corporate Tax (CT) Overview

In accordance with Federal Decree-Law No. 60 of 2023, the UAE imposes a CT rate of 9% on taxable income exceeding AED 375,000 for most legal entities and individuals conducting business activity. Taxable income below this threshold is taxed at 0%.

Many businesses in the UAE may see this as a significant change in the corporate landscape, making it crucial for businesses to understand the registration and filing requirements.

Here is a comprehensive guide to help you navigate the corporate tax system in the UAE.

Who is Required to Register

All local legal entities and individuals who conduct business activity in the UAE are required to undergo CT registration, regardless of taxable income or business structure. Additionally, foreign legal entities are required to register under the condition that they are effectively managed and controlled in the UAE.

UAE Corporate Tax Registration Process

The registration process is free of charge and can be done in 30 minutes digitally, at any time. This allows businesses to gain their Corporate Tax Registration Number (CT TRN) and fulfil their obligations. Below is a simple step-by-step guide to the registration process:

Prepare Required Documents

Typically, individuals applying to register for CT are required to prepare a trade license and an Emirates ID or a passport. Legal entities require the aforementioned in addition to a proof of authorisation from an authorised signatory. It is essential that each document does not exceed a file size of 5 MB and is submitted in either PDF or Word format.

Create an EmaraTax Account

Access the EmaraTax portal provided by the Federal Tax Authority (FTA). You can create a new account or use an existing one via an email ID or phone number.

Next, create or select a taxable person for your business to register for CT.

Submit Application

Complete the online registration form and upload the required documents. The FTA typically processes applications within 20 business days.

Receive Approval

In cases where your application is rejected, an email will be sent, including the reasons behind the rejection, where you can reapply after resolving the prior issues. In other cases, the FTA may request additional information for approval. However, once approved, you will receive your CT TRN as well as a digital registration certificate via email.

Tax Return Filing in UAE

Once registered, CT returns must be filed within 9 months and kept as a record for 7 years following the end of the relevant tax period. Below is an approach to guide you through the filing process:

Prepare Financial Statements

Ensuring your financial statements comply with the International Financial Reporting Standards (IFRS), use the Accrual Basis of Accounting when your revenue exceeds AED 3,000,000 or the Cash Basis of Accounting if it is below that threshold.

Calculate CT

Determine your taxable income and adjust for exemptions and deductions. Finally, multiply by the applicable tax rate to calculate your CT. Exemptions and deductions may include dividends received from local legal entities, business expenses incurred to derive taxable income, etc.

File Tax Return

Submit your corporate tax return through the EmaraTax portal by the specified deadline. Even if your taxable profit is below the threshold for the 9% tax rate, you must still file a return.

Special Provisions for Free Zone Companies

Free-zone companies are subject to corporate tax but may qualify for a 0% rate on profits from qualifying activities. To benefit, they must meet criteria such as maintaining sufficient substance, earning qualifying income, etc.

Penalties for Non-Compliance

Non-compliance with corporate tax regulations can result in substantial penalties. These range from AED 10,000 for late registration to up to AED 20,000 for other violations, including failure to maintain required records or submit accurate returns.

How CBD Can Assist

Understanding and complying with the UAE’s corporate tax requirements is crucial for any business operating in the region. Therefore, to mitigate risks and guarantee your business’ success, CBD offers businesses with ongoing accounting services for tax advisory and compliance, personalised service, and so much more.