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04 Feb, 2025

With the introduction of corporate taxation in the UAE, it is imperative that all
businesses comprehend their tax registration responsibilities. Starting from June
1, 2023, all companies, including those in free zones, shall register for corporate
income tax, even if they are already registered for VAT.

Corporate Tax in UAE is a direct tax imposed on the net income or profit of
corporations and businesses introduced by the UAE Ministry of Finance. This
tax reform is designed to support medium and small enterprises by instituting an
initial statutory tax rate of 9% on corporate profits exceeding AED 375,000. It is
obligatory to comply with the corporate tax regulations for all eligible Taxable
Persons in the UAE. This involves corporate tax registration, filing annual tax
returns, and maintaining accurate accounting records.

Moreover, the introduction of corporate tax in UAE is to meet the international
tax standards.

The Federal Tax Authority has left no room for ambiguity – all businesses
operating in the UAE are obligated to register for corporate tax in 2024. This
directive extends to enterprises, irrespective of their profitability or the duration of
their establishment. Even businesses incurring losses are not exempt from this
mandatory registration.

The threshold for corporate tax registration is mandatory, aligning with the
ethos of a proactive approach. Even new businesses setting up in the UAE are
advised to register for corporate tax immediately.

Here are the key points:

• Corporate tax rate: 9% on taxable income over 375,000 dirhams
($100,000).
• Deadline for the UAE resident companies: Varies based on incorporation
and trade license issuance, with the earliest deadline being 31 May, 2024.
• Non-resident companies with a presence in the UAE must also register for
corporate tax.
• Penalties: Failure to register on time incurs a penalty of 10,000 AED
as per Cabinet Decision No.75 of 2023.
According to FTA Decision No. 3 of 2024:
• UAE-incorporated entities have 3 months from incorporation to register.
• Foreign entities managed in the UAE have 3 months from the end of the
financial year.
• For individuals exceeding 1 million AED in business, resident persons
must register by March 31 of the following year, while non-residents have
three months from meeting tax liability.
It is essential to know your category and register on time to avoid penalties. If
you need any assistance, our firm is here to facilitate your smooth navigation
through tax registration procedures. Please don’t hesitate to reach out for expert
guidance and unwavering support.

 

Esenyel Partners | Attention UAE Businesses: Time to  Register for Corporate Tax!
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