- September 7, 2023
- Posted by: Shuraa Tax Consultant
- Category: Corporate Tax
The UAE government announced on January 31, 2022, that a new corporate tax would be implemented. The United Arab Emirates has never historically taxed the income of corporations. Except a few sectors, including resource exploitation and foreign banking. However, many more businesses in the area will have to start paying the new 9% corporate tax rate.
The newly implemented corporate tax in the UAE will not affect every business, and some may even be exempt from paying it. Learn more about the new corporate tax in the UAE and its implications for you.
What is the Register for corporate Tax in UAE
Starting in 2023, the corporate tax rate in the UAE will be set at 0% and 9% for all companies earning more than 375,000 AED (approximately $100,000 USD) in taxable net income; following the application of certain exemptions. Businesses who generate less taxable net income than this amount will pay tax at 0%.
In accordance with the Global Minimum Corporate Tax Rate agreement; The UAE has also declared that major multinational corporations with income of more than EUR 750 million will be subject to a 15% tax in addition to the corporate tax.
Due to the new UAE corporation tax, most businesses must save money to pay their taxes. Companies commencing their tax years in January will be exempt from paying tax on income generated before January 1, 2024.
Characteristics of Register for Corporate Tax in UAE
business taxes, tax-free zones, VAT systems, and the absence of the federal income tax are just a few of the policies. Discover essential aspects of the tax system by continuing to read.
Who can pay taxes?
Tax will be levied on legal entities with recognized structures, including LLCs, PSCs, PJSCs, and LLPs. Additionally, any foreign legal entity resident of another country who generates money in the UAE will be charged. Although free zones will pay 0% corporation taxes in exchange for adhering to all legal requirements; This also applies to free zone businesses that conduct business with the mainland. Corporate tax regulations may also apply to natural persons (UAE residents and non-residents).
A business will pay no tax if its net income is less than AED 375,000; Taxation will apply to 9% of its taxable net income exceeding AED 375,000. Due to their unique business circumstances, more giant international corporations will also pay a varied tax rate.
Who is not subject to this rule?
Corporate tax legislation will contain a participation exemption from corporate tax upon earning dividends or selling stock in a subsidiary firm. Furthermore, corporations wholly owned by the government, as well as nonprofit organizations, public benefit groups, investment funds, and enterprises engaged in exploiting oil and other resources, are exempt from corporate taxes.
Determining one’s taxable income
The tax rate and income are typically calculated by making an adjustment (when required) in the net profit or loss presented in the company’s financial statements. In the event of a business loss, the corporation may deduct up to 75% of the amount from its taxable income in subsequent fiscal years.
A collection of businesses may be able to combine to form a tax group that would allow them to be classified as a single taxable entity. A corporation or subsidiary must not be an exempt party or have a free zone registration in addition to other conditions to accomplish this.
The system will permit credit in tandem with foreign tax paid in a foreign jurisdiction against foreign tax income that has not been exempted to prevent double taxation.
How do I register for corporate tax in the UAE?
The pre-registration of company tax in the EmaraTax platform has been announced by the Federal Tax Authority. Taxpayers can manage all their registrations, returns, refunds, deregistrations, and payments online through this portal. The user-friendly EmaraTax interface makes it simple to make VAT payments as well.
Using these straightforward EmaraTax Login instructions, you can register for an account only through EmaraTax. To properly register for corporation tax in the UAE, you might need to submit all the necessary paperwork.
When do companies in the register for corporate tax in UAE
So, Every taxable person in the UAE who registers for corporation tax is required to file and pay corporate tax. According to the terms of Federal Decree-law No. 47/2022, a corporation’s tax return must be submitted nine months after the end of the tax year. The deadline for paying corporate tax for the specific fiscal year for which the corporate tax return is filed is the same. The possible timelines, deadlines, and tax periods are illustrated by the examples below;
Corporate Timeline for the Fiscal Year of the Company June 1 through May 31
The basic corporation tax timeline for a company whose fiscal year begins on June 1, 2023, and concludes on May 31, 2024, will be as follows.
- The first tax periods will run from June 1 through May 31 (2023–2024), following which the company will Register, File and pay the due taxes before the end of 9 months after 31st May 2024
- The Taxpayer must register (first time), file and pay the corporate income tax for the first tax period before the end of nine months after the end of the tax period which is before 28/02/2025.
- In this instance, the total amount of time that can be used for such a fiscal year is 9 months. The taxable person must register with FTA for corporate tax purposes before the end of these months.
Corporate Timeline for the Fiscal Year of the Company Jan. 1 to Dec. 31
UAE Corporate Tax deadlines
- The first tax period will run from January 1 to December 31 of 2024, following which the business will Register, File and pay the due taxes before the end of 9 months after 31 Dec 2024
- September 30 (2025) will be the first due date for the year Jan to Dec 2024 for corporate tax registration, filing and payment. Before this deadline, the tax can be paid at any time.
- In this situation, the total amount of time that can be used for such a fiscal year is 9 months. During this time, the taxable firm had best register for itself. All the tax periods will have 9 months after the end date of the financial year to register (First tax year), file and the pay the CIT due.
- Any corporation can comprehend their corporate tax timeline using the examples. If a business is having trouble, they can seek the advice of UAE corporate tax advisors.
Services for registering for corporate tax in UAE
The tax advisers at Shuraa Tax are among the most skilled and knowledgeable in the field of corporate tax registration. We have tax consultants who offer high-quality assistance during the Corporate Tax registration process.
The significant changes brought about by the implementation of Corporate Tax are well known to our team. Early planning for business tax compliance reduces expenses significantly and eases team pressure. You may be confident of a seamless and limitless transformation thanks to the tax consultants at Shuraa’s broad knowledge and experience.
To keep compliant with the rules and avoid fines and penalties, Shuraa Tax helps you with updates on Corporate Tax Registration and filing CT returns.