UAE: Federal Tax Authority opens pre-registration for corporate tax

The UAE's Federal Tax Authority (FTA) on Sunday announced that it launched early registration for corporate tax through the EmaraTax platform to ensure digital tax services to the registered members and businesses.

The latest move is in line with Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, which stipulates that taxable persons will become subject to corporate tax from the beginning of their first financial year that starts on or after June 1, 2023.

The authority explained that the early registration period is available from January 2023 to May 2023 for certain categories of companies operating in the UAE. These selected companies will be receiving invitations from the FTA by email and SMS, allowing them to register via the EmaraTax platform.

"Since the announcement of corporate tax in the UAE, the FTA has intensified its efforts, in collaboration with the competent authorities, to develop procedures to implement it in accordance with the highest standards," FTA director-general Khalid Ali Al Bustani, said.

He said the FTA will ensure the efficiency, accuracy, and seamlessness of administrative procedures in a way that will not impact business operations and flow. "The authority prioritises supporting all business sectors to comply with tax regulations and procedures through flexible mechanisms that align with international best practices,” Al Bustani said.

The UAE corporate tax regime, with only nine per cent levy from June 1,2023, will be amongst the most competitive in the world. The corporate tax on business profits above Dh375,000 ($102,110) will help diversify government revenue away from the oil sector and broaden the government’s revenue base.

Who can register

Pankaj S. Jain, managing director of AskPankaj Tax Advisors, said the corporate tax registration will be distinct and independent of the VAT registrations.

"All businesses (w.g. free zones, companies and individuals would be required to register even if the taxable income is below the threshold of Dh375,000 per annum or exempt," Jain told Khaleej Times on Sunday.

In reply to a question, he said businesses are not required to take any action on corporate tax registration as of now unless they received an "invitation to register" during the January-May period.

"No penalties relating to registration may be imposed if the businesses ensure to register at least before the due date for tax return submission (i.e. nine months from the end of the relevant financial year)," Jain said.

Mahar Afzal, managing partner at Kress Cooper Management Consultants, if the individuals have taken the business licence and conduct commercial activity like working as an owner of the sole establishment, civil company etc., such businesses are liable to register for tax, and their taxable income will be subject to corporate tax.

"The new tax regime allows a generous compliance period to implement the new levies in the country. With a financial year starting on June 1, 2023, and ending on May 31, 2024, businesses will have until February 28, 2025, to file their tax returns and make payments," Afzal said.

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