Registration and Requirements
These are the steps that each company doing business in the United Arab Emirates needs to take in order to adhere to the corporate tax system.
As the United Arab Emirates prepares to enact corporate tax in 2024, companies must guarantee compliance. The following are essential actions that any UAE-based business must do in order to comply with the impending corporate income tax regulations:
REGISTRATION PROCESS:
Corporate tax will be imposed beginning with the first fiscal year that begins on June 1, 2023, or later.
Regardless of whether they have already registered for VAT, all businesses, even those in free zones, are required to register for corporate income tax.
The EmaraTax portal on the FTA website is the permanent link for registration. It takes no more than 30 minutes and consists of four simple stages.
The FTA website offers a thorough video guide that walks through the company tax registration procedure via the EmaraTax portal.
The EmaraTax platform was created with the goal of making tax registration, return filing, and payment procedures simpler for all users. It is based on worldwide best practices.
In order to register for corporation tax, taxpayers who have already registered for VAT and excise tax must access their EmaraTax online account, choose the Taxable Person, fill out the form, and attach the required supporting papers. A Tax Registration Number (TRN) for company income tax will be provided upon approval.
The first step for people who are not registered for VAT or Excise Tax is to create a new User Profile in EmaraTax. They can then finish the registration process by creating a profile of a Taxable Person, choosing corporate tax registration, and submitting an application in line with that choice. For an application to be successful, it must have accurate information and up-to-date supporting documentation.
DOCUMENTS REQUIRED:
The trade or business license, the authorized signatory's passport and Emirates ID, and the evidence of authorization (POA/MOA) are required documents for Legal Persons to register for corporate tax.
The FTA highlights the requirement for accurate shareholding percentages that match the owners' real holdings and for the incorporation date to coincide with the company's start date as specified in the Memorandum of Association (MOA). It is also necessary to specify the entity's proper tax period.
Organizations seeking to establish a Corporate Tax Group are required to register separately, get a Tax Registration Number, and then apply to establish a Corporate Tax Group later on, per the FTA's announcement.
ENSURE ACCURATE ACCOUNTING DATA:
The company tax law in the United Arab Emirates requires certain accounting documents.
Professional teams can help businesses with bookkeeping and accounting that complies with regulations.
SUBMIT THE FEDERAL TAX AUTHORITY(FTA) A CORPORATE TAX SUBMISSION:
After the first taxable period has ended, this step needs to be finished.
A corporation must file a tax filing with the FTA even if it is eligible for an exemption or tax reduction.
CORPORATE TAX RATES IN THE UAE:
Tier 1: Businesses with yearly net profits up to AED 370,000 are subject to a 0% tax rate.
Tier 2: Companies earning more than AED 370,000 are subject to a 9 percent tax levy.
Tier 3: Variable tax rates for major multinational corporations in accordance with OECD Pillar Two recommendations.
CORPORATE TAX FOR FREEZONE COMPANIES:
Businesses located in free zones are not always exempt from paying corporate income tax.
Eligible Free Zone If an individual meets certain standards, such as retaining sufficient substance, earning qualifying income, and adhering to transfer pricing regulations, they may be excluded.
SMALL BUSINESS RELIEF RULE:
Companies that generate less than AED 3 million in revenue in a given tax period are eligible for relief and are not subject to corporate income tax.
CALCULATION OF TAXABLE PROFIT:
Revenue less business-related costs equals taxable profit; there are special guidelines for costs such as salaries, interest, entertainment, and overseas branches.
DISTINCTION BETWEEN CORPORATE TAX AND VAT:
Annual net profits are used to pay corporate income tax, while customers' VAT is collected during sales transactions.
Businesses that are already registered for VAT must additionally register for corporate income tax.
UPDATES AND ADMINISTRATIVE FINES:
Effective August 1, 2023, administrative fines will be imposed for infringement of corporate tax laws.
Penalties for failing to file tax returns, repay payable taxes, maintain necessary documents, transmit data to the FTA, and submit accurate tax reports range from AED 500 to AED 20,000.
To enlighten the business community in the United Arab Emirates on corporate income tax, the FTA has started an extensive awareness campaign. The program covers the Corporate Tax Law and procedures that encourage self-compliance through awareness sessions, workshops, and webinars.
Since its launch in June, a specialized awareness platform has informed and assisted taxpayers as well as the business sector.
Arabic and English virtual workshops on "Corporate Tax Registration" covered important subjects such setting up a new user profile on the EmaraTax site, obtaining the necessary paperwork, handling applications, and obtaining a UAE Corporate Tax Registration Number.
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