Register for corporate tax
Corporate tax will apply from the first financial year starting on or after June 1, 2023.
All companies, including those in free zones, must register for corporate income tax, irrespective of existing VAT registration.
Registration is accessible at all times through the EmaraTax portal on the FTA’s website, and the process involves four straightforward steps, taking no more than 30 minutes.
A comprehensive video guide detailing the corporate tax registration process via the EmaraTax portal is available on the FTA’s website.
The EmaraTax platform, designed based on international best practices, aims to simplify tax registration, return filing, and payment processes for all users.
Taxpayers already registered for VAT and Excise Tax can log in to their EmaraTax portal account, select the Taxable Person, opt for corporate tax registration, and complete the form with necessary documentation. Upon approval, a Tax Registration Number (TRN) for corporate income tax will be issued.
For those not registered for VAT or Excise Tax, creating a new User Profile in EmaraTax is the initial step. Subsequently, they can complete registration by establishing a Taxable Person profile, selecting corporate tax registration, and applying accordingly. Accurate information and updated supporting documents are crucial for a successful application.
Required documents for corporate tax registration of Legal Persons include the trade or business license, the passport and Emirates ID of the authorized signatory, and proof of authorization (POA/MOA) for the signatory.
The FTA emphasizes the need for precise shareholding percentages corresponding to the owners’ actual holdings and aligning the incorporation date with the company’s commencement date as per the Memorandum of Association (MOA). The appropriate tax period for the entity must also be provided.
Entities aiming to form a Corporate Tax Group should register individually, obtain a Tax Registration Number, and subsequently apply to form a Corporate Tax Group at a later date, as announced by the FTA.
Keep proper accounting records
Specific accounting records are mandated by UAE’s corporate tax law.
Companies can seek assistance from professional teams for compliant accounting and bookkeeping.
File a corporate tax submission with the Federal Tax Authority (FTA)
This step must be completed after the end of the first taxable period.
Even if a company qualifies for an exemption or tax relief, a tax submission must be filed with the FTA.
Corporate tax rates in the UAE
Tier 1: 0 percent tax rate for companies with annual net profits up to AED375,000.
Tier 2: 9 percent tax rate for companies with profits exceeding AED375,000.
Tier 3: Different tax rates for large multinational companies, subject to OECD Pillar Two guidelines.
Corporate tax for free zone companies
Free zone businesses are not automatically exempt from corporate income tax.
Qualifying Free Zone Persons may be exempt, meeting criteria like maintaining adequate substance, deriving qualifying income, and complying with transfer pricing requirements.
Small business relief rule
Businesses earning revenue below AED3 million per tax period qualify for relief, exempting them from corporate income tax.
Calculation of taxable profit
Taxable profit is determined as revenue minus business-related expenses, with specific rules for expenses like salaries, interest, entertainment, and foreign branches.
Distinction between corporate tax and VAT
Corporate income tax is paid on annual net profits, while VAT is collected from customers during sales transactions.
Existing VAT-registered businesses must also register for corporate income tax.
Administrative penalties and updates
Administrative penalties for corporate tax law violations, effective from August 1, 2023.
Penalties range from AED500 to AED20,000 for failure to keep required records, submit data to the FTA, file tax returns, settle payable tax, and submit correct tax returns.
The FTA has launched a comprehensive awareness campaign to educate the UAE’s business community on corporate income tax. The campaign includes awareness sessions, workshops, and webinars covering the Corporate Tax Law and processes that promote self-compliance.
A dedicated awareness platform, initiated in June, continues to provide knowledge and support to taxpayers and the business community.
Virtual workshops on ‘Corporate Tax Registration’ have been conducted in Arabic and English, covering essential topics such as creating a new user profile on the EmaraTax portal, required documents, processing applications, and issuance of a UAE Corporate Tax Registration Number.
