As the United Arab Emirates (UAE) solidifies its corporate tax framework, businesses across the country are gearing up to meet upcoming registration deadlines set by the Federal Tax Authority (FTA). Enacted on June 1, 2023, the Corporate Tax (CT) law represents a significant shift in the UAE’s tax regime, affecting entities on the mainland, within free zones, and offshore, as well as foreign entities operating within the UAE.
Under this new legislation, all business entities, irrespective of their income being taxable or exempt, are required to register for corporate tax. This is a critical change from the past, as registration for Corporate Tax is mandatory even for entities already registered for VAT under the FTA.
The first major deadline for CT registration looms on May 31, 2024, targeting entities whose trade licenses were issued in January or February of any year. Following closely, entities with licenses issued in March or April have until June 30, 2024, to register. These deadlines are crucial for businesses to adhere to, to avoid potential penalties and ensure compliance with the UAE’s tax laws.
The registration process, though straightforward on the FTA portal, demands precise information and may sometimes require detailed clarifications. For this reason, many businesses are seeking the expertise of tax professionals to assist in the registration process, ensuring that all necessary details are correctly and thoroughly submitted.
In addition to providing a structure for tax collection, the UAE’s Corporate Tax law aligns with international tax standards. It includes provisions affecting foreign entities either managed and controlled from the UAE or having a permanent establishment or significant nexus within the country. Moreover, the law offers several exemptions and relief measures, notably for small businesses and qualified free zone persons, provided specific conditions are met.
As the UAE continues to integrate into the global economic framework, this move towards a more regulated tax environment is seen as a step towards ensuring economic stability and transparency. Businesses operating in the UAE are advised to review their current tax status and prepare diligently for the upcoming registration deadlines, leveraging professional advice to navigate this new landscape effectively.
