Commencing from June 1st, 2023, the United Arab Emirates (UAE) has enacted regulations for business taxation purposes. As delineated by the Federal Tax Authority, businesses surpassing a specified revenue threshold are now obligated to enroll in either corporate tax or business tax in the UAE. This law serves as an extensive guide on UAE business taxation, furnishing a step-by-step manual for businesses to navigate the corporate tax registration process and fulfill their return obligations. The introduction of Corporate Tax in the UAE will impact a diverse array of entities and individuals, encompassing all businesses and natural persons engaged in commercial activities under a commercial license in the UAE, free zone businesses, foreign entities involved in regular trade or business within the UAE, as well as those participating in banking, real estate management, construction, development, agency, and brokerage activities. In light of these alterations, it is strongly recommended that businesses to seek the guidance of Tax Consultants in the UAE to ensure compliance during both the business tax registration process and the fulfillment of return requirements.
Exemptions from Business Tax in UAE
The corporate tax legislation in the UAE provides tax exemptions and incentives to enterprises, covering specific sectors and agreements on Double Taxation Avoidance (DTAs) with various nations. These measures are designed to prevent dual taxation on earnings. Essentially, individual income from employment, dividends, and specific rental proceeds derived from real estate investments in the UAE remain exempt from taxation. Similarly, corporate tax exemptions apply to businesses engaged in natural resource extraction, qualifying dividends from shareholdings, and capital gains. To qualify for exemptions, specific criteria must be met in the case of intra-group transactions and reorganizations.
Business Tax in UAE Free Zones
The UAE Tax-Free Zone presents a distinctive benefit to eligible businesses by granting them a favorable 0% Corporate Tax rate on their "Qualifying Income." To qualify, entities must meet specific criteria, including maintaining a substantial presence in the UAE, generating income that qualifies, refraining from opting into standard Corporate Tax rates, and complying with transfer pricing requirements as outlined in the Corporate Tax Law. Additional conditions may be set by the Minister for Qualifying Free Zone Person status. Non-compliance or choosing the regular Corporate Tax regime exposes entities to standard Corporate Tax rates, promoting tax compliance and fostering economic growth within UAE's Free Zones.
Corporate Tax Rates for UAE Businesses
The corporate tax rate in the UAE is structured as follows:
| Up to AED 375,000 of taxable income: | 0% Corporate Tax Rate.
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| Taxable income exceeding AED 375,000: | 9% Corporate Tax Rate.
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To add on, large multinational corporations meeting specific criteria under 'Pillar two' of the OECD Base Erosion and Profit Shifting Project will be subject to a different, yet-to-be-specified tax rate. This demonstrates UAE's commitment to aligning its corporate tax framework with international standards and accommodating diverse business structures.
Business Tax Registration in the UAE
Taxable Persons are required to register for UAE Corporate Tax and obtain a Corporate Tax Registration Number for effective tax administration. Specific Exempt Persons may be requested to register by the Federal Tax Authority. Businesses are required to adhere to tax compliance and reporting obligations, including maintaining precise financial records, complying with international accounting standards, filing annual returns, and renewing licenses regularly. Comprehensive regulatory compliance, including obtaining necessary permits and licenses, is essential for businesses operating within the legal framework.
Procedure for Business Tax Registration in the UAE
Follow this step-by-step guide for corporate tax registration in the UAE:
- Create an account on the Emara Tax Portal: Log in to the Emara Tax portal (eservices.tax.gov.ae) or use the UAE Pass to create an account.
- Taxable Individuals: Select or create a taxable person profile, providing the necessary details.
- Dashboard: Open the dashboard for the selected taxable person.
- Corporate Tax Section: Access the corporate tax section on the dashboard.
- Guidelines and Instructions: Follow the guidelines and instructions, marking the checkbox to start the registration process.
- Details Submission: Add all required details in the portal, and click on the "Next step" button.
- Identification and Documents: Provide identification and authorized signatory details, uploading relevant documents.
- Review and Declaration: Review the application, sign the declaration, confirming the accuracy of the provided information.
- Submission: Apply for business tax registration.
The Federal Tax Authority will review the application, accepting, rejecting, or requesting resubmission if necessary.
Important Dates for Business Tax Registration in the UAE
Taxpayers have until the first tax return filing date to register. Entities with year-end on May 31 have 26 months (till February 28, 2025), and those with year-end on December 31 have 33 months (till September 30, 2025). The Federal Tax Authority has issued a user manual detailing the registration process for business tax in the UAE.
How Tax Consultants UAE Can Help You
To navigate Business Tax in UAE effectively, businesses are advised to avail the expert services of top Tax Consultants in UAE. Tax Consultants UAE has a team of professional Tax Consultants well-versed with the latest UAE tax regulations for the corporate tax registration process. Therefore, businesses should seek the expert services of Tax Consultants in the UAE to ensure compliance upon business tax registration. Contact Tax Consultants UAE today to avail professional tax services and we shall be glad to assist you.
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