In a recent ruling (i.e. the judgment no. 3, 2024) in which the UAE Federal Tax Authority (FTA) has established a deadline for tax-paying individuals and exempt individuals to apply for corporate tax registration (FTA decision). This FTA Decision is operative as on March 1, 2024.
The dates for filing tax returns for corporations is determined by the resident’s classification, the date of incorporation and the date of the business’s launch. Every business operating within the UAE are required to be provided with all the essential information in accordance with the latest guidelines. If you are searching for UAE corporate tax advice, we have listed below a few of the tips to benefit you understand.
A few key aspects that are essential to the UAE Corporate Tax Law
Here is a brief outline of tax compliance obligations of businesses that fall under the tax rules-
Tax Registration within 30 days of becoming qualified for corporation tax all tax-exempt businesses must apply to CT at the Federal Tax Authority (FTA).
- File Tax Returns: Every tax deductible entities are required to file the CT return within the specified period in accordance with the FTA.
- Tax payment: Within stipulated period of time, tax-paying entities must pay their CT tax liability.
- Record-keeping: Taxable businesses need to keep their records for at least five years in order to justify their CT tax returns.
Here is a brief overview of the new tax compliance for corporate entities rules in the UAE in 2024.
Registering for the Corporate Tax
It is mandatory for all tax-paying businesses, even those that operate in free zones, to file a corporation income taxes, regardless of whether they are already been registered with VAT. This process is made easy through FTA’s (FTA) Emara Tax portal that provides a seamless registration process. It shouldn’t take more than 30 mins to finish the easy registration procedure. The website has a step-by-step video for new users that will benefit from completing the registration.
Documents Required for Corporate Tax Registration
Documents required for corporate tax registration include:
- An Emirates ID issued by an authorized signatory
- Proof of Authorization (POA/MOA) for the signatory
- Business license or trade license
- Valid passport
- Complete information on shareholding percentage
- Filing Corporate Tax Submission
In completing the tax return for corporate entities Entities should know the tax percentage that must be paid based on the net profits.
- Tier 1: No tax for corporations with annual net profit that exceed AED 375,000.
- Tier 2: Tax rate: 9% for companies earning greater than AED 375,000.
- Tier 3: Big multinational corporations must have to pay taxes at a distinct amount as per OECD Pillar Two guidelines.
Corporate Tax for Free Zone Companies
Companies operating in free zone companies are not completely exempt from tax on corporate income. Certain Free Zone companies may not have to pay taxes if they meet certain standards like earning an income that is considered to be qualifying and abide by transfer pricing regulations.
Calculation of Taxable Profit
The method of calculating tax-deductible profit is to subtract expenses from the revenue total. There are particular regulations that apply to costs such as interest, payroll branches that are overseas, as well as entertainment. The method of calculating tax-deductible profit is to subtract costs from the total revenue. There are regulations specific to expenses like payroll, interest overseas branches, entertainment.
Administrative Penalties for not complying with corporate tax
Businesses in the United Arab Emirates that violate corporate tax laws could be liable to administrative fines ranging from AED 500 up to AED 20,000.
The FTA has launched a comprehensive awareness campaign that will assist business professionals in understanding the implications of the corporate income tax. In-depth details on Corporate Tax Law is provided through a variety of seminars, workshops and webinars in the course of this educational endeavor.
How to ready for Corporate Tax?
It’s essential to stay up-to date with the latest changes and adhere to the established rules to ensure that your business adheres to your obligations under the UAE Corporate Tax (CT) Law. Here are the steps you need to take to follow in navigating the CT system
- Check out the ministry of finance’s Corporate Tax Law to see whether your company meets the criteria for tax compliance.
- Go to the website for the Federal Tax Authority and the Ministry of Finance to find out the date for tax implementation. You can also communicate with tax and finance experts.
- Be aware of the basic principles to tax compliance including the accounting or tax period, the deadlines for filing tax returns, as well as the importance of keeping financial records. This type of information is accessible on both official sites.
- Visit the tax authorities regularly sites to stay updated on any changes or changes to the tax rules. The information may change as time passes as taxes for business operations within the United Arab Emirates are a relatively new policy.
- Maintain accurate financial records through desirable accounting practices. This could be necessary for future tax compliance and normal business processes.
Connect with a Tax Professional Advisor
As businesses prepare to be operating under this new UAE Corporate Tax Compliance 2024 It is recommended to seek out the benefit of skillful financial and tax experts. ebs chartered accountants is there to benefit businesses that comply with tax laws. ebs chartered accountants is committed to offering its clients the perfect tax compliance and administration services.
FAQs
What is the latest Corporate Tax Regulation in UAE state?
As per the Ministry of Finance, the new federal corporate tax (CT) will apply to the net earnings of businesses that are incorporated.
What are the people who will be exempted under the latest UAE corporate tax?
Governmental and government-controlled organizations are yet to be named in a cabinet resolution. Natural resource companies that are extractive or non-extractive can be exempt from UAE corporate tax.
What will be the tax rates for corporations for UAE 2024?
The UAE adopted the federal corporation tax, which has a standard tax rate of 9% as a statutory requirement in effect for the financial year beginning from or after June 1 2023.