UAE Corporate Tax Registration

Deadlines for Corporate Tax Registrations UAE: Imposition of a Dh10,000 Fine Explained

Understanding the Deadlines for Corporate Tax Registrations in the UAE: Imposition of a Dh10,000 Fine

The Ministry of Finance specifies that a penalty of Dh10,000 is applicable for registrations submitted after the stipulated deadline. Comprehensive information on the subject is provided below.

UAE Corporate Tax Registration

Authorities in the UAE have established specific deadlines for businesses to submit their applications for Corporate Tax registration. Commencing March 1, 2024, the Federal Tax Authority (FTA) decision has outlined the timeframes within which each category of taxable entities or individuals must register to avoid breaching tax laws.

As per the Ministry of Finance, a Dh10,000 administrative penalty is enforced for registrations submitted after the designated deadline. Presented here is all the essential information you need to be aware of.

What are the updated timelines for registering Corporate Tax?

Entities that are juridical persons (organizations) established, incorporated, or officially recognized before March 1, 2024. According to our research, the registration deadlines are organized according to the initial month of incorporation for businesses, regardless of the year.

“This standardized application implies that the deadlines remain consistent for businesses established in the same months, irrespective of their year of incorporation.

Corporate Tax Registration Last Date

Month of license issuanceDeadline
January or FebruaryMay 31
March or AprilJune 30
MayJuly 31
JuneAugust 31
JulySeptember 30
August or SeptemberOctober 31
October or NovemberNovember 30
DecemberDecember 31

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Corporate Tax Registration Timeline in the UAE

As per the FTA decision, if a juridical person lacks a license by March 1, 2024, they are required to apply for registration within three months, i.e. by May 31, 2024. The FTA specifies that if an entity holds multiple licenses, the one issued earliest will be considered.

For resident juridical persons (organizations) established or recognized after March 1, 2024: New resident businesses incorporated after March 1 generally have a registration deadline of three months from their incorporation date.

Here are the deadlines as specified by the FTA:

Persons incorporated or recognized under UAE legislation, including free zone entities: Three months from the date of incorporation, establishment, or recognition.

Persons incorporated or recognized under the laws of another country or foreign jurisdiction: Three months from the end of the financial year of the person.

Non-resident juridical person before March 1:

– Persons with a permanent establishment in the UAE: Nine months from the date of existence.
– Persons with a nexus in the UAE: May 31.

Non-resident juridical person after March 1:

– Persons with a permanent establishment in the state: Six months from the date of existence.
– Persons with a nexus in the state: May 31.

Natural persons (individuals operating in their personal capacity):

– For resident natural persons with a turnover exceeding Dh1 million: Deadline is March 31 of the subsequent year.
– Non-resident natural persons must register within three months of meeting the requirements of being subject to tax.

The deadline for resident natural persons with a turnover surpassing Dh1 million is March 31 of the following year. On the other hand, non-resident natural persons are required to register within three months from the point at which they meet the criteria for being subject to tax.

When and how does the fine apply?

Administrative penalties will be applied to taxable persons failing to submit their Corporate Tax registration applications within the specified timeframes outlined in the FTA’s Decision for each segment.

Businesses give careful consideration to this update. Being prepared to meet the relevant deadlines is crucial to avoid incurring late registration penalties amounting to Dh10,000.

The information provided herein is for the general information of the user and is provided in good faith. We make no representation or provide warranty of any kind, express or implied, regarding the adequacy, suitability, validity, or completeness of the information. Our advice in regard to UAE corporate tax and value added tax is based on our understanding of the relevant laws and the regulations issued. We cannot be held responsible for new regulations and/or interpretation of existing regulations by the FTA that is not consistent with our advice. Under no circumstance shall we have any liability to any user of this information or to third parties for any loss or damage of any kind incurred as a result of the use or reliance of this information.

UAE Corporate Tax Registration For Small Businesses

UAE Corporate Tax Registration For Small Businesses

UAE Corporate Tax: Navigating Mandatory Registration for Small Businesses

As the annual tax season approaches, small and medium-sized enterprises (SMEs) in the UAE should focus on enrolling for corporate tax. In this period, numerous small business proprietors in the UAE need to give precedence to the registration process for corporate tax. This applies not only to businesses experiencing losses but also to those that are newly established.

Now that the UAE’s initial full-year corporate tax period has commenced, businesses should intensify their auditing procedures. Crucially, they must ensure registration with the Federal Tax Authority from a compliance standpoint.

Whether a business is relatively new or undergoing financial losses, it is imperative to register, regardless of whether their annual profit surpasses or falls below the Dh375,000 threshold.

“There still appears to be uncertainty among some SME owners regarding the timing of corporate tax registration, thinking it can wait until their profits reach the Dh375,000 mark,” mentioned a tax consultant. “This perception is incorrect.”

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The registration for corporate tax has been accessible since June of the previous year. According to UAE regulations, businesses following the calendar year as their financial year will settle their 2024 corporate tax by September 2025.

There exists a program known as ‘Small Business Relief.’

“Businesses must demonstrate their eligibility by submitting tax returns and maintaining necessary records. If they do not reach the Dh375,000 profit threshold, eligible taxable individuals, such as business owners, have the option to choose ‘Small Business Relief’ on their tax return.

“Upon making this selection, they can then complete a simplified tax return and take advantage of the relief.”

Here is information to be aware of regarding Small Business Relief.

1. To qualify for the relief, the business’s revenue must be below or equal to Dh3 million for the most recent and all previous tax periods.

2. If the revenue surpasses Dh3 million, the business can no longer opt for the relief package, even if the revenue falls below the threshold in subsequent tax periods. However, the fundamental requirement remains unchanged – these businesses still must register for corporate tax.

Throughout recent weeks, the UAE tax authorities have conducted workshops and provided regular guidelines on various aspects of corporate tax, set at 9 percent of the annual profit once the Dh375,000 threshold is exceeded.

“The UAE Corporate Tax applies to all businesses ‘incorporated, effectively managed, and controlled’ in the UAE,” stated Ahmed. “This effectively means registration is mandatory, regardless of the profit or revenue a business generates.

“We strongly recommend companies utilize accounting software as part of their best tax practices, though some companies opt for Excel-based accounting. If a business chooses independent auditors, the costs are competitive in the UAE, but the actual expense depends on the volume and complexity of the operations.”

The Value Added Tax (VAT) registration threshold.

UAE businesses have a track record of complying with Value Added Tax (VAT) requirements. Under the VAT registration, companies had the choice to voluntarily register if their taxable supplies reached Dh187,500 and were required to register if it reached Dh375,000.

However, there is a significant distinction – VAT revolves around a tax levied on each transaction, and the rules of compliance are markedly different from those governing corporate tax.

“Even if a new business is currently being established in the UAE, the owner(s) would be wise to register for corporate tax,” advised a consultant. “It’s a crucial step that requires immediate attention.”

The information provided herein is for the general information of the user and is provided in good faith. We make no representation or provide warranty of any kind, express or implied, regarding the adequacy, suitability, validity, or completeness of the information. Our advice in regard to UAE corporate tax and value added tax is based on our understanding of the relevant laws and the regulations issued. We cannot be held responsible for new regulations and/or interpretation of existing regulations by the FTA that is not consistent with our advice. Under no circumstance shall we have any liability to any user of this information or to third parties for any loss or damage of any kind incurred as a result of the use or reliance of this information.

Can I Claim VAT On Old Invoices in UAE

UAE VAT: Can I Claim VAT On Old Invoices in UAE

UAE VAT: Can I Claim VAT On Old Invoices in UAE

Input tax, i.e. VAT paid on the purchase of goods and services is claimable in the tax return by set off against the output VAT collected on sales invoices. In the normal course, input tax should be recovered in the first tax period in which the following two conditions are satisfied:

  • the tax invoice is received; and
  • either the tax invoice has been paid in the period or the taxable person has decided to settle the invoice in a subsequent tax period – usually within six months after the agreed credit period.

Intention to settle the tax invoice:

Where the invoice has not already been settled within the tax period, it is pertinent to consider whether the taxable person has already decided to settle the invoice.

In this regard, merely receiving an invoice is not considered evidence of intention to settle.

However, if the tax invoice has been duly processed through the normal verification and approvals process of the taxable person and has been recorded in their accounting system, this is likely to be seen as a decision or intention to settle the invoice in due course.

It is important, however, to note that where an invoice has been received by the taxpayer, but has not been verified through the relevant processes to determine its validity and suitability for payment, it may not be possible to argue that the taxpayer has formed the intention to settle the invoice.

In such a case, the taxpayer should consider whether the input tax claim should be deferred to a later tax period.

In the case where a taxable person has received a tax invoice but has not yet decided regarding the settlement of the invoice, the Federal Tax Authority (“FTA”) may argue that the two conditions noted above – receipt of the invoice and the settlement of the invoice or the decision to settle – have not been satisfied.

In this case, therefore, it would not be appropriate to claim the input tax on such an invoice. In such cases, therefore, the input tax claim invoice should be made in such later tax period when the decision to settle has been taken.

UAE VAT: Can I Claim VAT On Old Invoices in UAE?

Article 55 (2) of the Federal Decree-Law No. (8) of 2017 on Value Added Tax specifically provides that where input VAT on a tax invoice has not been claimed during a tax period notwithstanding that the taxable person was entitled to make such a claim, the taxable person may claim the tax in the subsequent period.  

Situations may arise where input tax has not been claimed in the tax period when the taxable person was entitled to claim nor in the subsequent period, as provided in Article 55 (2).

In such circumstances, the FTA has clarified that the unclaimed input VAT may be claimed through a Voluntary Disclosure.

Voluntary Disclosure:

A voluntary disclosure is a process where the taxpayer notifies the FTA of an error or omission in a VAT return.

A voluntary disclosure for claiming input VAT would be made by amending the input tax previously reported in the VAT return of one of the two tax periods during which the taxpayer could have claimed the input VAT.

Voluntary disclosures is normally required to be made within 20 business days of the taxpayer becoming aware of the error or omission. However, the FTA may accept late voluntary disclosures if the taxpayer is able to justify the delay by presenting an acceptable reason for the delay.

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Claim for periods before Tax Registration? 

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A taxpayer that is newly registered for VAT can claim back VAT paid on goods and services purchased prior to its VAT registration, provided that the goods and services for which input VAT is being claimed were used to make supplies that would ordinarily give the right to input tax recovery.

However, input tax may not be recovered in the following cases:  

  1. The goods and services for which input tax is being claimed, were not used for making taxable supplies.
  2. The input tax pertained to capital assets that were depreciated before the tax registration.
  3. In case of services which were received more than five years prior to the tax registration.
  4. where the goods were moved to another country.

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UAE VAT Implementation Services: What We Offer

Do you think that managing VAT obligations is too challenging for your business?

Beaufort Associates provides VAT Implementation Services in the UAE. Our financial consultants are fully qualified and trained to assist you and guide you on the Do’s and Don’ts of the UAE VAT regime.

We offer professional VAT compliance support and advice tailored to your business needs. Our team can help you to comply with the VAT taxation rules and regulations.

Here is what we can do for you:

  • Help you to register with the FTA;
  • Advise you on your reporting deadlines;
  • Provide guidelines to avoid fines and penalties;
  • Provide you with accounting support to ensure proper recording of VAT;
  • Work with you to prepare your VAT tax returns;
  • Arrange to file the VAT tax return with the tax authorities:
  • Assist in filing for a Voluntary Disclosure:
  • Assist in claiming a refund due to you
  • Assist in claiming VAT refund for new residences for UAE Nationals.

We can also assist with corporate tax consulting, accounting and bookkeeping, audit and a host of other services.

If you need help with any of the above services, for your business in the UAE, feel free to contact us today and request a free initial consultation. We would be glad to assist you.

The information provided herein is for the general information of the user and is provided in good faith. We make no representation or provide warranty of any kind, express or implied, regarding the adequacy, suitability, validity, or completeness of the information. Our advice in regard to UAE corporate tax and value added tax is based on our understanding of the relevant laws and the regulations issued. We cannot be held responsible for new regulations and/or interpretation of existing regulations by the FTA that is not consistent with our advice. Under no circumstance shall we have any liability to any user of this information or to third parties for any loss or damage of any kind incurred as a result of the use or reliance of this information.

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