CT Registration in the UAE: A Brief Overview

Corporate Tax Registration

Background: 

On 31^st January 2022, the UAE announced the implementation of a Corporate Tax regime that applies to businesses starting June 1, 2023. Corporate tax is set at 9% on taxable income exceeding AED 375,000, with a 0% tax rate for income below that threshold.

Who Must Register for Corporate Tax?

• All businesses and individuals conducting business in the UAE, including free zone companies, are subject to the corporate tax regime.
• Businesses earning taxable income above AED 375,000 annually must register for corporate tax.

How to Register for Corporate Tax:

1. Federal Tax Authority (FTA) Registration:
   • Businesses will need to register for corporate tax with the Federal Tax Authority (FTA) via their portal.
2. Obtain a TRN (Tax Registration Number):
   • Businesses need to apply for a Tax Registration Number (TRN) if they haven’t registered already, especially if they are already VAT-registered.
3. File Corporate Tax Returns:
   • Companies must file annual corporate tax returns with the FTA. Businesses will need to declare their taxable income, applicable exemptions, and tax payable.
4. Compliance:
   • After registration, companies must comply with various corporate tax regulations, including preparing financial statements in accordance with UAE accounting standards, submitting returns, and making tax payments.

3. Penalties for Non-Compliance

Failure to register for VAT or corporate tax when required can result in significant penalties. These include:

• Late Registration Penalties: If a business fails to register for VAT or corporate tax within the required timeframes, it may incur late registration penalties.
• Late Payment and Filing Penalties: Fines are imposed for late payment of VAT or corporate tax, or failure to file returns on time.

The FTA has stringent controls in place to monitor compliance, and businesses are expected to keep detailed records of their financial transactions and tax-related documents.

4. Advantages of CT Registration

• Compliance with UAE Law: Registration ensures businesses comply with UAE’s tax laws and avoid penalties or legal complications.
• VAT Refunds: Registered businesses can reclaim VAT on business-related expenses.
• Credibility and Reputation: Being VAT-registered or corporate tax-registered enhances the credibility of a business in the UAE market, particularly with larger customers or suppliers.