Corporate Tax Registration for Offshore Companies in UAE | Guide, Deadline and Requirements

An offshore company in the UAE is a legally established entity within a free zone, designed to conduct international business while benefiting from various tax advantages. While it is not permitted to operate directly within the UAE market, it has the jurisdiction to conduct business globally.

This article provides an overview of the corporate tax implications for offshore companies in the UAE.

Also read: Corporate Tax in UAE for Oil and Gas Industries

Are Offshore Companies Required to Register for Corporate Tax in UAE?

As per Federal Tax Authority (FTA) Decision No. 3 of 2024, offshore companies are required to register for Corporate Tax in the following cases:

• A UAE-incorporated offshore entity conducts a business in the UAE or derives an income sourced in the UAE.
• A foreign offshore company that is effectively managed and controlled by the UAE.
• An offshore company having a permanent establishment (PE) in the UAE, meaning a fixed place of business or continuing economic activities in the UAE
• An offshore company having nexus in the UAE, where so provided by the respective tax laws.

Also read: Corporate Tax Filing in UAE

Guide to Corporate Tax Registration for Offshore Companies in UAE

The process of registering for corporate tax for offshore companies is as follows: 

1. Taxability Status

Identify whether your offshore company has income sourcing within the UAE or is creating a permanent establishment in the UAE.

2. Prepare all Relevant Documents

• License of trade from the offshore company
• MOA/AOA: Memoranda and Articles of Association
• Certificate of Incorporation
• List of all shareholders and directors
• Financial statement/ Business activity report

3. Registration of Account with Emaratax Portal

• The FTA has allocated an exclusive e-portal for offshore companies. (Emaratax)

4. Filing of Application for Registration Relating to Taxation

• Log in to the Emaratax portal through your account ID; file your application for registration relating to corporate income tax and attach the enclosures thereto.
• Mention the business to be continued or proposed along with the revenue generated thereof, accordingly

5. Get the Tax Registration Number (TRN)

• TRN shall be provided once verification is made by FTA and shall serve as proof for the offshore company about their corporate tax registration

Corporate Tax Registration Deadline for Offshore Companies

According to the FTA Decision No. 3 of 2024, an offshore company shall apply for tax registration within the following period:

Category	Deadline for Tax Registration
Offshore companies incorporated before 1 March 2024	31 May 2024-provided the license is issued in January or February 2024
Companies to be incorporated as offshore post 1 March 2024	Three months beginning the date of incorporation
Foreign companies that acquire nexus in the UAE	Within three months from the date the conditions about the nexus were satisfied
Non-resident offshore firms with a permanent establishment in the UAE	Within 9 months following setup

Also read: Top 10 Corporate Tax Consultants in UAE

Conditions for Corporate Tax Registration for Offshore Companies

An offshore company must have the following requirements to be qualified for corporate tax registration:

• Valid trade license.
• The company should engage in a taxable activity in the UAE.
• The company must maintain proper books of accounts.
• The company has to be registered with the FTA.
• File the annual corporate tax return.

Late Registration Penalties

In case any company does not get registered within this period, an administrative penalty may be applied according to Cabinet Decision No. 75 of 2023.

Corporate Tax Registration Requirements for Offshore Companies

The following are requirements for offshore companies to effectively ensure compliance with the corporate tax law in UAE: 

• Maintain Proper Financial Records: Bookkeeping Record: has to maintain the financial statements and records of business transactions for at least 7 years.
• Filing Annual Corporate Tax Returns: The Company shall file the corporate tax return annually via Emaratax.
• Compliance with Economic Substance Regulations (ESR): Those relevant activities carried out by overseas companies must comply with Economic Substance Regulations and shall report to the Ministry of Finance.
• Transfer Pricing Compliance: The cross-border transactions of the offshore companies with their related parties have to be performed in agreement with the transfer pricing legislation concerning compliance and documentation.
• Tax Laws Compliance: Offshore companies are advised to periodically consult Tax Experts in the UAE to keep updated with the changing corporate tax laws.

FAQs

Is an offshore company in UAE required to register for corporate tax?

Yes, all offshore companies that have taxable income from UAE-sourced revenues must register for corporate tax. It is necessary for compliance with the UAE Corporate Tax Law

What if an offshore company fails to register for corporate tax?

This will attract penalties, legal issues, and restrictions in conducting business in the UAE.

What will happen if an offshore company does not register for corporate tax in due time?

This is because a company may have penalties for not carrying out so on the given date of expiry. The company may be penalized by FTA, restricting operations or going to court.

How long will the registration take?

The time required for corporate tax registration may take a couple of weeks, which depends on the details in the application and the scrutiny process by FTA.

What is the corporate tax rate applicable for an Offshore company?

The standard UAE corporate tax rate is 9% applied to taxable income above AED 375,000. 

Does an offshore company qualify for an application for the exemption?

Offshore companies do not normally qualify for any tax exemptions unless explicitly stated in the UAE’s tax laws. In case an entity believes that it may apply, it will need to engage professional tax persons and apply via proper channels.