The introduction of federal corporate tax (CT) in the UAE marks a significant milestone in the country’s tax landscape. Announced in January 2022, the tax applies to the net profits of businesses and is effective from 1 June 2023. This tax regime, governed by amendments to Federal Decree-Law No. 47 of 2022, impacts entities across all emirates.
On 22 February 2024, the federal tax authority issued decision No. 3 of 2024 regarding the timeline for registration of taxable persons for corporate tax. According to article 51 of the UAE corporate tax law, any taxable person must register for corporate tax within the timeline set by the authority and obtain a tax registration number. This timeline is now specified in decision No. 3 of 2024.
Resident persons required to register for corporate tax in the UAE include those incorporated under UAE laws, including free zone entities, as well as those established abroad but effectively managed and controlled in the UAE. For natural persons resident in the UAE, the registration deadline is 31st March 2025. Compliance with these deadlines is crucial to adhere to UAE tax laws and avoid penalties.
Companies that were issued business licenses in the months of January or February, regardless of the year, will need to apply for CT registration before May 31, 2024, the nearest deadline, and the subsequent deadlines are as follows:
Date of Licence issuance (any earliest issued)Deadline for submitting a Tax Registration application
March and April30 June 2024
May31 July 2024
June31 August 2024
July30 September 2024
August and September31 October 2024
October and November30 November 2024
December31 December 2024
Where a person does not have a Licence at the effective date of this Decision3 months from the effective date of this Decision (i.e. 1 March 2024)
The concept of permanent establishment (PE) is an important facet in UAE corporate tax law. When an entity has a fixed or permanent place in the UAE through which business is conducted, it is considered to have a PE in the UAE. A non-resident person in the UAE also includes individuals or entities that have a permanent establishment in the state and derive state-sourced income or have a nexus in the state.
For non-resident persons with a permanent establishment (PE) in the UAE, the due dates for registration and compliance vary based on the establishment’s timing. If the PE was established before March 1, 2024, registration must be completed within nine months from March 1, 2024, which is November 30, 2024. However, if the PE was established after March 1, 2024, the registration deadline is six months from the PE’s establishment. For non-resident natural persons in the UAE, registration must be done within three months from the date their annual revenue exceeds Dh1 million.
If a juridical person who is a non-resident person earns revenue from any immovable property located within the UAE, then they will be considered to have a nexus in the UAE. For non-resident persons with a nexus in the UAE, the registration deadlines also depend on the timing of the nexus establishment. If the nexus was established before 1st March 1, 2024, the registration deadline is May 31, 2024. However, if the nexus was established after March 1, 2024, the registration deadline is three months from the nexus establishment.
Failure to apply for corporate tax registration within the specified deadline may result in a penalty of Dh10,000. This penalty aligns with those imposed for late registration and is outlined in the relevant regulations. It is crucial for businesses to comply with registration deadlines to avoid such penalties.
The writer is Partner, MICS.