Corporate Tax Registration: A Complete Guide

The Emirates has always been a popular choice among global investors and business owners looking to expand their business internationally. With its strong economy, pro-business policies, tax-friendly environment, and high-end infrastructure, it has held its reputation as a prime business hub. But since June 2023, when the corporate tax registration for businesses operating in the UAE became mandatory, a major shift in its business-friendly image has occurred.

Under the new tax rules, all businesses operating in the Emirates must follow the tax rules and do their tax registration to maintain their compliance. While the corporate tax is introduced, the UAE is still an attractive destination for many investors, global businesses, and entrepreneurs because of the lower tax rates compared to other business hubs worldwide. Businesses in the UAE can easily navigate this change by taking our professional corporate tax registration services in the UAE can help them avoid mistakes and maintain compliance.

Continue reading this blog and find out everything about corporate tax registration, from its registration process to required documents.

What is Corporate Tax in UAE?

On June 1, 2023, the corporate tax was introduced in the UAE, which is applied on their profits. This tax rule applied the standard 9% corporate tax rate to all businesses with annual taxable income over AED 375,000. However, any business with annual profits below this threshold doesn’t have to pay corporate tax, but it still needs to register for corporate tax with the FTA.

Most of the companies operating in the UAE, including mainland and free zone companies, are subject to this tax. Even if a free zone company qualifies for a 0% tax rate, it still needs to register itself with the FTA. The primary goal for introducing this tax was to align the nation’s and global tax standards, reduce dependence on income from oil resources, and promote economic growth.

Who Should Register for Corporate Tax in UAE?

As discussed earlier, paying corporate tax is not mandatory for every business in the UAE, but corporate tax registrationis. Even if a business is not earning profits more than AED 375,000, it still needs to register itself with the FTA. Here’s who needs to register for this tax in the UAE:

Mainland Companies- If your business is registered in the UAE mainland, you must register for this tax, even if your profit level is below the eligibility limit.
Free Zone Companies- Free zone businesses often enjoy a 0% tax rate, but still, they need to register for corporate tax with the FTA.
Branches of Foreign Companies– If you own an established business in any other country other than the UAE and operate the company’s branch in the Emirates, you have to register for corporate tax.
Small Businesses and Startups– Startups and small companies with earnings less than AED 375,000 will be exempted from paying corporate tax, but corporate tax registrationis still required for them.
Freelancers and Individuals with a License– Freelancers and solo entrepreneurs with a valid trade or free license need to register for this tax if they are earning from their services in the UAE.

Registration for the corporate tax is mandatory for almost all businesses in the UAE, whether they pay for it or not. If a business doesn’t register itself within the deadline, it can face a hefty penalty, like a fine of AED 10,000. If you are confused about whether your business needs to register for this tax or how to register for it, it is always a good idea to seek help from experienced corporate tax consultants.

When to Register for Corporate Tax in UAE?

The FTA and the UAE government have set specific deadlines forcorporate tax registration, and if any business fails to register itself within the deadline, it has to face a penalty of AED 10,000. Companies established before March 2024 need to register themselves within the timeline based on the month their license was issued. For example, if a company’s license was issued in January, its deadline to register for the corporate tax will be May 31, 2024.

Companies registered after March 1, 2024, need to register within 3 months from the date their business license was issued. It doesn’t matter where a business is registered, mainland or free zone, registration with the FTA for corporate tax is mandatory. If you have any confusion regarding the exact deadline for tax registration of your business, you must seek help from professional corporate tax consultants.

Key Documents Required for Corporate Tax Registration

Before understanding the steps of corporate tax registration, you need to make sure you have all the necessary documents that will make this process faster and easier for you.

For Natural Persons (Freelancers or Solo Entrepreneurs)

A copy of a valid trade or freelance license issued by a UAE authority.
An Emirates ID and a passport are needed to verify the personal identification of the business owner.
Financial records, like bank statements or invoices, which is proof of your business’s income.
Contact information, like email and phone number.

For Legal Persons (Companies or Entities)

A copy of a valid business license issued by a UAE authority.
An Emirates ID and a passport are needed to verify the personal identification of the business owners and shareholders.
Contact information, like a valid phone number or email address.
A detail about what business activities your business will operate in the UAE.
Bank account details and recent financial statements also needed to be provided.
MOA and AOA give information about the legal structure of your business.

Steps to Register for Corporate Tax in UAE

Corporate tax registrationis mandatory for both individuals and companies, even those with annual taxable income below AED 375,000. Here are the simple steps to register for it online using the EmaraTax portal:

Log in to EmaraTax- Firstly, you have to log in to the EmaraTax portal. You can log in using your email or UAE Pass. But if you don’t have an account, you first have to create one.
Add a Taxable Person- Next step is to link a taxable person or business to your profile, which allows the system to understand for which business you are doing tax registration for.
Choose Corporate Tax Registration- Then click on the corporate tax section and select the register button, which will start the application process.
Read and Agree to the Guidelines- Before moving further, you must read the official corporate tax registrationrules. After reading them, you need to tick the agreement box to continue the process.
Enter Entity Type and Details- Next, you have to select your business type (Natural or Legal Person) and add your trade license number and other basic information.
Fill in Identification Information- Now you need to enter your business details, like trade name and legal name (both in English and Arabic), and details related to your license.
Add Business Activities- Now, click on add business activities, and add all the activities you want to operate under your license in the UAE.
Add Ownership Details (if needed)- If your company’s shares are owned by owners that hold more than 25% shares, then their details need to be provided.
Add Branch Details (if applicable)- If your company operates more than one branch, you need to choose yes, and provide details about each of them.
Enter Authorized Signatory Info- In this step, you need to provide details, like the Emirates ID and passport of the person who will take care of your business on your behalf. Also, you might have to provide proof, like a Power of Attorney, if needed.
Review Everything- After filling in all the details, you must review them to check for any mistakes and then check the declaration box to confirm that the information filled in is correct and true.
Submit the Application- Once all sections are completed and verified, you need to click on the submit button. Then you’ll get a confirmation message, and later the authority will provide you with a unique TRN number.

Conclusion

Corporate tax registrationis no longer optional and is a legal obligation for almost all businesses operating in the UAE, whether you are a freelancer or acompany owner. Even though the online registration process for it is very simple, it still involves multiple steps and document uploads that must be followed correctly to maintain compliance with the tax laws.

Connect with HISAB Taskmaster CAdvisors if you are looking for a reliable partner for registration of corporate tax in the UAE. They have an experienced team of corporate tax consultants that will handle everything from start to finish, including document preparation, final submission, and after-registration obligations compliance. Save your business from delays and legal issues, connect with them to stay compliant with the UAE tax rules.