A Complete Insight About UAE Corporate Tax Compliance in 2024

Complete-Insight-About-UAE-Corporate-Tax-Compliance

In a recent judgement (i.e., judgement No. 3 of 2024), the UAE Federal Tax Authority (FTA) has now set a deadline for taxable individuals and some exempt individuals to register for corporate tax (FTA Decision). The FTA Decision is operative as of March 1, 2024.

The dates for corporate tax registration are determined by the resident’s category, date of incorporation, and date of business launch. All businesses operating in the UAE need to be equipped with all essential details as per the new guidelines. For those looking for UAE corporate tax advisory services, we have listed below some of the insights for a clear understanding.

Some key features of UAE Corporate Tax Law

Below is an outline of the tax compliance obligations for businesses falling under taxable rules-

  • Tax Registration: Within 30 days of being eligible for the corporate tax, all taxable organizations must register for CT with the Federal Tax Authority (FTA).
  • Tax Return Filing: All taxable entities must file the CT return within the stipulated time with the FTA. 
  • Tax Payment: Within the specified timeframes, taxable entities are required to pay their CT liability.
  • Record-keeping: Taxable companies must keep the record for at least 5 years to support their CT returns.

Below is the brief on the new corporate tax compliance requirements in the UAE in 2024.

Registering for the Corporate Tax

It is mandatory for all taxable enterprises, even those who operate in free zones, to file for corporate income tax, even if they have already registered for VAT. This procedure is made easier by the Federal Tax Authority’s (FTA) Emara Tax portal, which provides a smooth registration experience. It won’t take longer than 30 minutes to complete the straightforward registration process. The portal has a tutorial video for new entrants that can help in the registration process.

Documents Required for Corporate Tax Registration

Necessary documents for corporate tax registration include-

  • An Emirates ID from an authorized signatory
  • Proof of Authorization (POA/MOA) for the signatory
  • Trade license or business license
  • Valid passport
  • Accurate details of shareholding percentage

A Complete Insight About UAE Corporate Tax Compliance in 2024

Filing Corporate Tax Submission

When filing out the corporate tax submission, entities should know the tax percentage to be paid as per the net profit.

Tier 1: No tax for companies with annual net profits up to AED 375,000.

Tier 2: 9% tax rate for companies with earnings of more than AED 375,000.

Tier 3: Large MNCs must pay tax at a different rate per OECD Pillar Two guidelines.

Corporate Tax for Free Zone Companies

Corporations operating in free zone enterprises are not entirely exempt from corporate income tax. Qualifying Free Zone Companies might not be required to pay taxes provided they meet specific standards, such as earning qualifying income and abiding by transfer pricing regulations.

Free zone company set-up

Calculation of Taxable Profit

The process of calculating taxable profit involves deducting expenses from the total revenue. There are specific regulations for costs like interest, payroll, overseas branches, and entertainment. The process of calculating taxable profit involves deducting expenses from the total revenue. There are specific regulations for costs like interest, payroll, overseas branches, and entertainment.

Administrative Penalties for non-compliance of corporate tax

Companies in the United Arab Emirates that violate corporation tax laws may be subject to administrative fines of AED 500 to AED 20,000.

The FTA has initiated a comprehensive awareness campaign to assist the business community in comprehending the ramifications of corporate income tax. In-depth information on Corporate Tax Law is offered through several workshops, events, and webinars as part of this educational endeavour.

How to Prepare for Corporate Tax?

It’s critical to stay current on the most recent changes and follow the set rules to guarantee that your company complies with the UAE Corporate Tax (CT) Law. Below are the steps to navigate the CT regime-

  • Examine the Ministry of Finance’s Corporate Tax Law to see if your company fits the requirements to pay taxes.
  • Visit the website of the Federal Tax Authority and the Ministry of Finance to find out the date of tax implementation. You can even connect with tax and finance professionals.
  • Recognize the fundamentals of tax compliance, such as the accounting/tax period, the filing dates for tax returns, and the necessity of maintaining financial records. This kind of information is available on both official websites.
  • Regularly visit the tax authorities’ websites to be informed about any revisions or new guidelines. Details may change over time because business taxes in the United Arab Emirates are a relatively new policy.
  • Maintain complete financial records by best accounting practices, which may be required for future tax compliance requirements and standard business operations.

Connect with a Professional Tax Advisor

Since businesses are set to operate under the new UAE Corporate Tax Compliance 2024, it is wise to seek the assistance of professional tax and financial experts. The NRD Compliance service is there to help companies meet tax regulations. NRD is dedicated to providing clients with the best tax administration and compliance services.

FAQs

1) What does the new Corporate Tax Regime in UAE say?

According to the Ministry of Finance, the new federal corporate tax (CT) will be applied to the net profits of registered
businesses.

2) Who is exempt from the new UAE Corporate Tax?

Governmental and government-controlled organizations are yet to be named in a cabinet resolution. Natural resource
enterprises that are extractive or non-extractive are exempt from UAE corporate
tax.

3)What is the corporate tax rate in UAE 2024?

The UAE adopted the federal company tax with a standard statutory rate of 9%, effective for the financial year commencing on or after June 1, 2023.

There are no comments

Leave a Reply

Your email address will not be published. Required fields are marked *

Start typing to search

Shopping Cart
Translate »