Corporate Tax

The introduction of corporate tax in the UAE is scheduled for June 1, 2023. According to the law, individuals and businesses subject to taxation will face a 9% corporate tax from their initial fiscal year starting on or after June 1, 2023. They must acquire a corporate tax registration number. Since the initial announcement, businesses and tax experts have extensively deliberated on this development. This move positions the UAE as the fourth GCC nation to implement a federal business tax. Incorporating a corporate tax registration number aligns with the UAE’s commitment to enhancing its status as a premier global hub for commerce and investment, furthering its strategic growth and transformation goals. Additionally, corporate tax deters unfavorable tax practices and ensures compliance with international standards for tax transparency.

Corporate Tax Registration UAE

As per FTA’s Federal Decree Law 47, every taxable entity, including Free Zone Persons, must register for Corporate Tax and obtain a Registration Number.

The Federal Tax Authority explicitly requires exempt persons to register for Corporate Tax.
Taxable persons must submit corporate tax returns within nine months of the end of the specified tax period.
This deadline covers settling all Corporate Taxes owed for the respective Tax Period covered by the filed return.
In cases of exclusion permitted by the Minister, a Taxable Person must adhere to a specific timeline and format to register for Corporate Tax with the Federal Tax Authority.
The Authority mandates that Taxable Persons or Independent Partnerships register for Corporate Tax and acquire the Tax Registration Number.
Corporate Tax registration with the Tax Authority should be promptly completed when an individual becomes a Taxable Person.
Upon successful registration, entities are subject to a standard Corporate Tax rate of 9% on taxable income exceeding AED 375,000, with a 0% charge on taxable income up to AED 375,000.

How to register corporate tax in UAE?

The Federal Tax Authority has introduced a pre-registration process for corporate tax on the EmaraTax platform.
EmaraTax is an online portal consolidating tax-related tasks, including registrations, returns, refunds, deregistrations, and payments.
The platform’s user-friendly interface facilitates easy VAT payments and corporate tax management.
To get started, individuals can create an account on EmaraTax or migrate their existing FTA Account to the platform.
Successful registration for corporate tax requires the submission of all necessary documents as outlined in the UAE corporate tax regulations.
Utilising the EmaraTax Login guide simplifies the process of creating an account or transitioning an FTA Account, ensuring a smooth registration experience for corporate tax in the UAE.

Eligibility for Corporate Tax Registration in UAE and Applicable Rates

Businesses in the UAE are required to register for corporate tax, which is imposed on taxable income at the following rates:

A corporate tax rate of 0% is applicable to taxable income up to AED 375,000, and this rate applies to all qualifying income generated by the person in the free zone.
A 9% corporate tax rate is imposed on taxable income surpassing AED 375,000, and it applies to all non-qualifying income generated by the individual in the free zone.
Multinational corporations falling under OECD Base Erosion and Profit-Sharing laws within Pillar 2 of the BEPS 2.0 framework, with combined worldwide revenues exceeding AED 3.15 billion, the Ministry of Finance announced that the UAE will not implement Pillar Two rules before 2025.

Essential Documentation for UAE Corporate Tax Registration

For Corporate Tax registration in the UAE, businesses must provide specific documents. The entire process is online, and the required documents include:

Copy of the valid Trade License.
Passport copies of the owners/partners/shareholders associated with the license (valid and unexpired).
Emirates ID copies of the owners/partners/shareholders holding the license (valid and unexpired).
Memorandum of Association (MOA) or Article of Association (AOA).
Contact details of the person concerned, including mobile number and email address.
Comprehensive company contact details, encompassing the complete address and P.O. Box.
Information specifying the Corporate Tax Period.

The Importance of Corporate Tax Assessment Before Registration

Before registering for corporate tax, it’s vital to assess the risks thoroughly and legal factors related to the business, pre- and post-implementation. This approach ensures compliance with the country’s tax regime. Failure to properly assess may lead to corporate tax fines and penalties.

The assessment before corporate tax registration encompasses three key components: impact assessment, document assessment, and tax compliance assessment. Consider engaging professional corporate tax consultants or specialized firms for high-quality corporate tax assessment services.

Empower Your Business with HBCS Tax

HBCS Tax offers top-notch corporate tax services, accounting solutions, and audit services to help your business navigate everyday challenges, such as navigating corporate tax laws and transfer pricing regulations, addressing compliance issues, managing resource constraints, and enhancing accounting system compliance. For detailed information on UAE Corporate Tax Registration, contact HBCS Tax Consultants & Accountants. Contact us via phone or text at +971 55 605 2905 or email at: [email protected]

Corporate tax filing

Corporate tax returns filing in the UAE is not just about fulfilling a legal requirement; it’s also about maintaining transparency and accountability within your business. The implementation of corporate tax in the UAE has been a significant development for businesses operating in the region. While the tax rates are relatively low compared to other countries, it’s still crucial for businesses to accurately file their corporate tax returns to ensure they are meeting their obligations to the government.

By accurately reporting your financial information and paying the appropriate taxes, you are showcasing your commitment to operating ethically and contributing to the growth of the UAE’s economy.

So, let’s thoroughly understand the process of filing corporate tax returns in the UAE and the other essential considerations you should know to keep your business running hassle-free in Dubai.

What is Corporate Tax Return Filing in UAE?

Corporate Tax Return Filing in the UAE refers to the process of submitting a report to the Federal Tax Authority (FTA) by taxable person, detailing your business’s income and expenses for a specific tax period. This report helps the FTA determine your taxable income and the amount of Corporate Tax you owe. All registered taxable persons must file a corporate tax return, even if they have no taxable income or qualify for a 0% tax rate.

Who Needs to File Corporate Tax Returns in the UAE?

In the UAE, most businesses will need to file corporate tax returns. This includes:

1. Businesses and Individuals

Any entity conducting business activities under a commercial license in the UAE, including both local and foreign companies.

2. Free Zone Businesses

Generally, even free zone entities must file, although Qualifying Free Zone persons with certain benefits may have exemptions (check with the specific free zone authority).

3. Minimum Threshold

Businesses with annual taxable income exceeding AED 375,000 are subject to corporate tax and must file returns. Those below this threshold pay 0% tax but may still need to register.

A taxable person under the UAE corporate tax law is any business entity required to pay corporate tax. This includes residents (companies based in the UAE) and non-residents with a permanent establishment or deriving UAE-sourced income.

Entities Exempt from Filing

Certain entities are exempt from corporate tax returns filing in the UAE. Examples of entities that may be exempt include:

1. Public Benefit Entities

Non-profit organizations established for charitable purposes may be exempt, subject to meeting specific criteria.

2. Natural Resource Extraction

Businesses engaged solely in extracting UAE natural resources might follow Emirate-level tax decrees instead.

3. Investment Funds

Certain investment funds that meet the conditions set out in the corporate tax law.

It’s always advisable to consult with a HBCS tax professional for specific guidance on your situation, especially regarding exemptions and free zone benefits.

Deadlines for Corporate Tax Return Filing in the UAE

The UAE offers businesses a generous window to file their corporate tax returns. The general deadline falls 9 months from the end of the relevant tax period. This applies to both resident and non-resident businesses operating within the UAE.

The UAE operates under a self-assessment system for corporate tax. This means businesses are responsible for calculating, reporting, and paying their tax liability.

Let’s consider a company with a financial year ending on December 31, 2025 (tax period January 1, 2025 – December 31, 2025).

Adding 9 months to the end date (December 31, 2025) brings us to September 30, 2026.

Therefore, this company would have a deadline of September 30, 2026, to file its corporate tax return for the 2025 tax period.

Documents Required for Corporate Tax Return Filing

Filing a corporate tax return in the UAE requires the submission of specific documents which typically include:

Copy of Trade License (valid and unexpired)

Emirates ID copies of Owners/Partners/Shareholders

Passport copies of Owners/Partners/Shareholders

Memorandum of Association (MOA), if required

Financial Statements

Records Supporting Deductions (Receipts, invoices, and other documentation for expenses)

Taxable Income Calculations

Details of Depreciation and Amortization

Loan Documents (if applicable)

Records of Exempt Income (if applicable)

How to File Corporate Tax Returns in the UAE?

Filing corporate tax returns in the UAE involves several steps, from gathering the necessary documents to submitting the return online. Here’s a step-by-step process:

1. Ensure Tax Registration

Verify your company has a valid Tax Registration Number (TRN) issued by the Federal Tax Authority (FTA). If not registered, complete the registration process through the FTA’s online portal.

2. Gather Required Documents

Assemble the necessary documents (Company Registration Documents & Financial Documents). Ensure they are accurate, complete, and cover the relevant tax period.

3. Prepare the Tax Return

Utilize the official FTA corporate tax return forms, available online or through tax software providers. Carefully calculate your taxable income, considering all applicable deductions and exemptions as per UAE corporate tax regulations. Attach supporting documentation for claimed deductions and exemptions.

Choose the appropriate tax period for which you are filing the return. Fill in the details:

Enter financial details, including revenue, expenses, and net profit.

Provide information on any adjustments to income (e.g., depreciation, provisions).

Enter details of related party transactions and any tax payments made.

4. Submit the Tax Return

Complete the declaration section, confirming that the information provided is accurate and complete. Click the ‘Submit’ button to file your corporate tax return with the FTA.

5. Confirmation and Payment

Upon successful submission, you will receive a confirmation receipt or acknowledgement from the FTA. If you have a tax liability, ensure timely payment of the corporate tax due. Payment details and deadlines will be provided on the FTA portal.

6. Maintain Records

Retain all documents used for tax return preparation for at least five years from the filing date, as the FTA may request them for audits or verification purposes.

We highly recommend, getting expert assistance from professional like HBCS Tax to ensure accurate and timely filing of corporate tax returns in the UAE.

Penalties for Late Filing of Corporate Tax Returns in UAE

Penalties for Late Filing of Corporate Tax Returns in UAE. The UAE enforces penalties for late filing of corporate tax returns. A penalty of AED 500 per month applies for the initial twelve months of delay.

After the first year, the penalty increases to a steeper AED 1,000 per month or part thereof. There’s a maximum penalty cap, but the specific amount may vary depending on official pronouncements.

These penalties are imposed to encourage timely filing and ensure tax compliance. Filing late can significantly increase your tax burden, so adhering to deadlines is crucial. The Federal Tax Authority (FTA) has the authority to waive or reduce penalties in specific circumstances. However, it’s best to avoid late filing altogether.

Corporate Tax Return Filing Service in UAE

Filing corporate tax returns is crucial for businesses in the UAE to stay compliant and avoid penalties. Given the complexity of tax regulations, seeking corporate tax return filing services in UAE is a good choice.

HBCS Tax offers top-notch corporate tax return filing services, with a team of dedicated experts ready to handle all your tax and accounting needs. Our tax consultants in Dubai will review your finances and help with tax planning and bookkeeping. Our professionals ensure that your tax returns are filed accurately and on time, helping you avoid any unnecessary fines and maintain a good standing with the authorities.

Don’t stress about filing your corporate tax returns. Contact us today to learn how we can support your business with our reliable and comprehensive tax services.

Frequently Asked Questions

1. Is it mandatory to file corporate tax returns in UAE?

Yes, filing corporate tax returns is mandatory for most businesses operating in the UAE. This includes local and foreign companies with a UAE commercial license. Individuals with a business exceeding AED 1 million annual turnover also need to file.

2. What is the deadline for filing corporate tax returns?

Businesses have nine months from the end of their tax period to submit their return and settle any corporate tax due.

3. Should free zone entities file corporate tax returns?

Generally, yes. However, Qualifying Free Zone persons with compliant activities and no UAE mainland business may be exempt. It’s recommended to check with the relevant Free Zone authority or a tax professional to confirm your specific requirements.

4. What is the corporate tax rate in the UAE?

The standard corporate tax rate in the UAE is a flat 9%. However, there’s a 0% tax rate for businesses with annual taxable profits below AED 375,000.

5. Is there a Difference Between Taxable Income and Accounting Income?

Yes, taxable income and accounting income are not the same. Accounting income reflects your company’s overall financial performance, while taxable income is calculated based on accounting income with adjustments according to UAE corporate tax regulations.