UAE Corporate Tax 2024:Registration process, and Requirements

Rajinder Singh Nagiyal

February 16, 2024

Corporate Tax

UAE Corporate Tax 2024: Comprehensive Details, Registration process, and Requirements

The United Arab Emirates (UAE) is rapidly growing as a business hub and a favourable destination for entrepreneurs and investors.

With its attractive tax regime and robust legal framework, understanding corporate tax in the UAE is essential for businesses operating in the region.

In this comprehensive guide, we will delve into the intricacies of UAE corporate tax, including the basis, important considerations, registration process, requirements for tax returns, compliance standards, and its impact on business operations and financial planning.

Comprehensive Details of Corporate Tax in the UAE

The UAE government recently introduced a corporate tax of 9% for businesses and enterprises with permanent establishments in the UAE, which took effect on 1st June 2023.

Corporate tax is a type of direct tax levied on the net revenue of companies and other enterprises doing businesses. It may be seen as a contribution made by companies to the development and expansion of the UAE’s economy.

It is crucial for businesses to hire the services of RSN consultants to stay informed about the evolving tax laws and regulations for efficient compliance and seamless operations.

Corporate Tax in the UAE - Three Business Jurisdictions

There are three main business jurisdictions in the UAE where firms can be established. The three are the offshore, free zone, and mainland. Because offshore enterprises exclusively conduct business internationally, they are exempt from the corporate tax and VAT regimes among the three business jurisdictions.

Regarding Mainland businesses, all entities that meet the threshold must pay 9% corporate tax on any earnings they make from the UAE that exceed the threshold. All businesses, however, are required to keep up their books of accounts, audit reports, and corporate tax registration.

For Free Zone companies, there are specific exemptions from corporate tax payments. But this is only applicable to “Qualifying Free Zone Persons.” Businesses located in free zones that meet specific requirements and earn qualifying income are not required to pay corporate tax.

Note: In order for the Free Zone Company to be included in the list of “Qualifying Free Zone Persons,” they need to, among other requirements:

Establish a long-term presence in the UAE with staff, an office, and major business operations
Earn Qualifying Income
Not withdraw from the Free Zone Tax system
Transfer price rules and documentation
Trade with companies in the same free zone or any other

Corporate Tax Rates in the UAE

The UAE CT rate is stated thus:

0% for taxable income less than AED 375,000:

Businesses are exempt from corporate tax if their taxable income is less than AED 375,000 per year. For this reason, smaller businesses can function without the burden of corporate taxes.

9% for taxable income greater than AED 375,000:

Businesses that have taxable income above AED 375,000 per year are subject to a corporate tax rate of 9%. This rate guarantees that the UAE’s revenue is contributed proportionately by larger enterprises.

Registration Process/Requirements for Corporate Taxpayers in the UAE

The taxpayers need to register with FTA for corporate tax and get a Tax Registration Number (TRN).
Compile the financial statements using the UAE’s recognised accounting standards.
Get certification from a third-party financial auditor after conducting an audit of the financial statements.
Save all tax return-related records and paperwork for a minimum of seven years.
The deadline for submitting the return and paying the tax is nine (9) months.
Penalties will be imposed if the taxpayer disregards the UAE’s corporate tax laws.

Conclusion

As the UAE embraces core changes in its corporate tax system, businesses need to proactively adapt and position themselves for success. Stay ahead of the curve by understanding the nuances of the new regulations and taking the necessary steps to ensure compliance.
RSN is here to support you on this journey. Reach out to our expert team for personalised guidance tailored to your business needs. Together, let’s navigate the exciting terrain of the UAE corporate tax landscape and build a prosperous future for your business.

Frequently Asked Questions

Q: What are the details of the new UAE corporate tax law in 2024?

A: The new UAE Corporate Tax Law, which came into effect on June 1, 2023, imposes a 9% tax on the profits of businesses subject to corporate tax in the UAE.

Q: Who is subject to UAE corporate tax?

A: Businesses that are resident in the UAE and operate in the mainland UAE are subject to UAE corporate tax. This includes companies that have a permanent establishment in the UAE and are not exempt from corporate tax.

Q: Are there any exemptions from corporate tax in the UAE?

A: Yes, there are. Certain businesses may qualify for corporate tax exemption under specific conditions outlined in the UAE Corporate Tax Law. It is essential to understand the criteria for exemption and comply with the requirements for claiming it.

Q: How does the federal corporate tax impact UAE companies?

A: The introduction of federal corporate tax in the UAE signifies a shift in the tax landscape for businesses, requiring them to navigate new tax obligations and procedures to ensure compliance with the law.

Q: What are the consequences of non-compliance with UAE corporate tax regulations?

A: Non-compliance with UAE corporate tax regulations may result in penalties and legal consequences for businesses. It is crucial for companies to understand their tax obligations and adhere to the prescribed rules to avoid any adverse consequences.