The United Arab Emirates (UAE) has recently introduced a Corporate Tax Law that will go into effect starting from or after June 1st, 2023. The new Federal Law was decreed for the taxation of corporations and businesses in the UAE to further cement its position as a global hub for business and investment.
UAE Corporate Tax is going to be implemented under Federal Law. Hence, the Corporate Tax law has many articles and regulations regarding who is going to be subject to taxation and who is exempt. Many taxable individuals are also wondering if there is a deadline to register for Corporate Tax.
So, in today’s post we will be listing the businesses and entities that are required to register for Corporate Tax as well as cover the timeline for registration and whether there is a deadline set by the authorities.
Who is subject to Corporate Tax?
According to The Federal Tax Authority, Corporate Tax applies to “Taxable Persons” that meet certain conditions, which include but are not limited to:
- Companies which establish residence in the UAE.
- Companies managed and controlled in the UAE.
- Any individual who conducts business or business Activity in the UAE as defined by the Ministry of Finance.
- Foreign legal entities that have a Permanent Establishment in the UAE.
Remember! It’s important to note that resident and non-resident business and/or business activity will be taxed differently as per the following:
- Resident corporations are taxed on profit derived from both domestic and foreign sources.
- Non-Resident corporations are taxed only on profit derived from sources within the UAE.
Who needs to register for Corporate Tax in the UAE?
The Federal Tax Authority requires all “Taxable Persons” to be registered for UAE Corporate Tax and obtain a Corporate Tax Registration number. In some cases, exempt individuals and entities may be requested to obtain a Corporate Tax Registration number as well.
Who is exempt from Corporate Tax?
Government entities and government-controlled entities are automatically exempt from Corporate Tax. Additionally, Extractive businesses and Natural Resource businesses will be exempt from Corporate Tax when notified as such to the Ministry of Finance. In fact, some Extractive and Natural Resource businesses may be exempt from registration all together under certain conditions.
Aside from the entities and businesses mentioned above, some organizations may be exempt from Corporate Tax following the approval of the Federal Tax Authority such as:
- Public or private pension and social security funds.
- Public Benefit entities listed in a Cabinet decision.
- Qualifying Investment Funds.
- Wholly owned and controlled UAE subsidiaries of the Government.
Is there a deadline for Registration?
Even though there is no official registration deadline announced for Corporate Tax by the Ministry of Finance, Taxable Persons must file a Corporate Tax return no longer than 9 months after their first tax period has ended.
For example, businesses with a financial year starting in June 2023 and ending in May 2024 need to register before Feb 28th, 2025. And businesses with a financial year starting in January 2024 and ending in December 2024 need to register for Corporate Tax by September 30th, 2025.
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