Understanding Corporate Tax Registration Timelines In The UAE

Introduction 

The Federal Tax Authority (FTA) has released Public Clarification (CTP001) to specify the timeline requirements for corporate tax registration in the UAE. Timely and precise tax registration is crucial to avoid significant penalties and legal complications. This blog aims to deliver a thorough overview of the corporate tax registration timelines as outlined in FTA Decision No. 03, effective from March 1, 2024. 

Special Considerations 

1. Previous Timelines Overridden: FTA Decision No. 7 of 2023’s registration timeline has been superseded by FTA Decision No. 3 of 2024. However, the new decision does not change the exemption application deadlines specified in Decision No. 7 of 2023.  

2. Exemption Applications: Entities seeking exemptions under Article 4(1)(f) to (i) of the Corporate Tax Law must comply with the timelines specified in FTA Decision No. 3 of 2024. The deadlines for submitting exemption requests remain unchanged despite the new decision. 

3. First Tax Period: The timelines in FTA Decision No. 3 of 2024 also apply to juridical persons whose first tax period has already commenced, even if the business intends to cease operations or liquidate after the start of the first tax period. 

Who Needs to Register for Corporate Tax? 

All taxable persons, including resident and non-resident juridical persons, as well as natural persons engaged in business or business activities, are required to register for corporate tax in the UAE. This includes: 

1. Resident Juridical Persons 

2. Non-Resident Juridical Persons 

3. Resident Natural Persons 

4. Non-Resident Natural Persons 

Registration Timeline for Resident Juridical Person

A resident juridical person must submit a tax registration application based on the date of its incorporation, establishment, or recognition under UAE legislation. This includes Free Zone Persons and Offshore Companies incorporated or registered in the UAE. 

1. If incorporated before 1st March 2024:  

The registration deadline is based on the month of license issuance, regardless of the year. The deadlines are as follows: 

2. If incorporated on or after 1st March 2024: 

The Registration application must be submitted within 3 months from the date of incorporation, establishment, or recognition. 

3. Foreign Jurisdiction Entities: 

Entities incorporated or recognized under foreign jurisdiction but effectively managed and controlled in the UAE must submit their tax registration application within 3 months from the end of their financial year. 

Registration Timeline for Non-Resident Juridical Person 

Non-resident juridical persons must submit their tax registration applications depending on when they became non-resident persons: 

1. Prior to the 1st March 2024, there shall be two cases, such as: 

1. Permanent Establishment: It shall submit the tax registration application within the 9 months from the date of existence of such permanent establishment. 

2. Nexus in the UAE: It shall submit the tax registration application within the 3 months from the effective date of the FTA Decision no. 3 of 2024, i.e. 31st May 2024. 

2. On or after 1^st March 2024, there shall be two cases, such as: 

1. Permanent Establishment: It shall submit the tax registration application within the 6 months from the date of existence of such permanent establishment. 

2. Nexus in the UAE: It shall submit the tax registration application within the 3 months from the date of establishing a nexus in the UAE. 

3. Where a person has permanent establishment as well as nexus in the UAE, the deadline for submitting the tax registration application shall be earlier of the two deadlines. 

For the purpose of date of existence of permanent establishment, it shall be when the permanent establishment is recognized for UAE Corporate Tax purposes. 

If an international agreement for the avoidance of double taxation provides for a longer duration to recognize a Permanent Establishment in the UAE than the Corporate Tax Law, the provision in the international agreement shall prevail. 

Registration Timeline for Resident Natural Person 

A Resident Natural Person must submit a Corporate Tax Registration in the UAE application if their turnover from business or business activity in the UAE exceeds AED 1 million during a Gregorian calendar year. Starting from 1 January 2024, the application must be submitted by 31st March of the subsequent Gregorian calendar year.

Registration Timeline for Non – Resident Natural Person 

Non – Resident Natural Person must submit a Tax Registration application if their Turnover from Business or Business Activity in the UAE derived from a Permanent Establishment exceeds AED 1 million during a Gregorian calendar year, starting from 1 January 2024. This must be done within three months of meeting the corporate tax requirements. 

The requirements are met when they have a permanent establishment in the UAE and they exceed the AED 1 million Turnover threshold derived from the Permanent Establishment. 

Note: For natural persons, whether resident or non-resident, the first tax period is the 2024 Gregorian calendar year, and turnover generated before January 1, 2024, is not subject to corporate tax. 

Penalties for Non-Compliance

Failure to submit a tax registration application within the specified timeline will result in an administrative penalty of AED 10,000. 

Conclusion 

Understanding and adhering to the corporate tax registration timelines in the UAE is crucial for all taxable entities to avoid penalties and legal issues. The Federal Tax Authority’s Decision No. 3 of 2024 provides clear guidelines for various entities, ensuring a structured approach. By following these timelines, businesses can ensure smooth operations and maintain regulatory compliance.