UAE’s FTA Gives Further Clarification for Registration Timelines for Taxable Corporates

UAE’s FTA Gives Further Clarification for Registration Timelines for Taxable Corporates

The Federal Tax Authority (FTA), has released a Public Clarification regarding the Registration Timelines for Taxable Persons for Corporate Tax. This clarification aims to provide further explanation and clarification on the deadlines available for the various categories of Taxable Persons subject to Corporate Tax and encourages them to submit their Tax Registration application promptly.

According to the FTA, the provision of the legislation has yet to be altered or sought to be changed by this explanation. Consequently, unless otherwise specified, it will take effect on March 1, 2024, the implementation date. It highlights deadlines for different categories of taxable residents and non-resident corporates. It also covers registration requirements for individuals wishing to use the Corporate Tax Law to get FTA-exempt status.

This Public Clarification intends to clarify the timeline when a Taxable Person is required to submit a Tax Registration application to the FTA for Corporate Tax purposes.


What Does the FTA Clarification Say?

The clarification states that anyone subject to taxes must apply for tax registration with the FTA at the given time. Non-compliance with the clarification will attract a fine of Dh10,000. For taxable corporates, the explanation provides a thorough analysis and examples to help them understand how the deadlines relate to their particular category.


UAE’s FTA Gives Further Clarification for Registration Timelines for Taxable Corporates

Further, the FTA explains the registration timelines with examples mentioned below

  1. Where a juridical person was incorporated or otherwise established or recognized prior to 1st March 2024, it shall submit a Tax Registration Application for the corporate tax to the FTA based on the month of their license issuance. Where a juridical person does not hold a license as on 1st March 2024, the Tax Registration application deadline is 31st May 2024 i.e., 3 months from the effective date of FTA Decision No. 3 of 2024.

  2. Where a juridical person holds a license as at 1st March 2024 that has expired but has not been cancelled, it must submit a tax registration application by reference to the month of its original license.


  3. If a juridical person holds more than one license as at 1st March 2024, it should use the License with the earliest issuance date when determining the deadline by which it should submit the registration application.


  4. Companies incorporated or otherwise established or recognized in the UAE on or after 1st March 2024, it shall submit a Tax Registration application within 3 months from the date of incorporation, establishment, or recognition.


  5. Where a juridical person incorporated, established or otherwise recognized under the legislation of a foreign jurisdiction but effectively managed and controlled in the United Arab Emirates it shall apply for tax registration within three months from the end of the financial year.


  6. Being a non-resident person prior to 1st March 2024: Where a juridical person is a Non-resident person prior to 1st March 2024 having a permanent establishment in the UAE it shall apply for tax registration within nine months from the date of existence of the permanent establishment.

    If the Juridical person has the nexus in the UAE before 1st March, 2024, it shall submit its Tax registration application within 3 months from the effective date of FTA Decision No- 3 of 2024, i.e., by 31st May 2024.


  7. Being a non-resident person on or after 1st March 2024: Where a juridical person is a Non-resident person on or after 1st March 2024 having a permanent establishment in the UAE it shall apply for tax registration within 6 months from the date of existence of the Permanent Establishment.

    If the Juridical person has the nexus in the UAE, it shall submit its Tax registration application within 3 months from the date of establishing the nexus in the UAE.

    Note for Point 5 & 6: The date of existence of the Permanent Establishment is when the Permanent Establishment is recognized for UAE Corporate Tax purposes. Generally, the Permanent Establishment is recognized in the UAE, when the place of Business had established a degree of permanence of six months in the UAE, assuming all the other requirements to have a Permanent Establishment have been met.

    However, when 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.

    If a Non-Resident Person has both a Permanent Establishment and nexus in the UAE, they must submit a Tax Registration application for Corporate Tax to the FTA by the earlier of the two deadlines.


  8. Registration timeline for natural persons that are Resident Persons: For Resident Persons, if their business turnover in the UAE exceeds AED 1 million during a Gregorian calendar year, starting from January 1, 2024, they must submit a Tax Registration application for Corporate Tax to the FTA by March 31 of the subsequent Gregorian calendar year.

    Any income or turnover generated prior to January 1, 2024, is not subject to Corporate Tax for the respective tax periods.


  9. Registration timeline for natural persons that are Non-Resident Person: For Non-Resident Persons, if their turnover derived from a Permanent Establishment in the UAE exceeds AED 1 million during a Gregorian calendar year, starting from January 1, 2024, they must submit a Tax Registration application for Corporate Tax to the FTA within three months of meeting the requirements of being subject to Corporate Tax.

    Any income or turnover generated before January 1, 2024, is not subject to Corporate Tax for the respective tax periods.

Conclusion

Regulating simple and understandable taxes from resident and non-resident companies and natural persons is one way of keeping the UAE floating smoothly and attracting FDI. The UAE’s steadfast dedication to developing the most open and transparent tax system possible that fosters a business climate conducive to profitability is reaffirmed by this most recent FTA amendment. If you want to have a better understanding or need any assistance with the new FTA-levied corporate tax, connect with the NRD Compliance service. The company is ready to assist you and keep you up to date on any happenings in the tax regime.


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