UAE Corporate Tax: Banks start telling business clients to meet registration deadlines

Dubai: New businesses launching in the UAE are being told by their banks to get started on corporate tax registrations as soon as possible to ensure smooth dealings in the future, according to market sources.

“Down the road, it will be virtually impossible to open and operate bank accounts for those that do not comply with these stipulations on corporate tax registration,” said Halim Kanaan, Partner at Dubai-based Kanaan Advocates & Legal Consultants.

“The FTA (Federal Tax Authority) has been very clear in broadcasting their deadlines for various types of companies - offshore, onshore and free zone based - to register for their TIN (Tax Identification Number).

“Failure to do so will also attract administrative penalties, which has already been implemented in certain cases (for not meeting deadlines).”

Newly formed or licensed companies in the UAE are getting the message loud and clear.

Banking and financial industry sources confirm that ‘subtle’ pressure is being directed at business clients that had delayed submissions of their credentials with the FTA through the EmaraTax portal. Each month, the FTA has been issuing reminders on the timetables that businesses should follow, which is linked to the month when they were licensed.

“When banks start telling clients to be on top of the corporate tax registration deadlines, these businesses will listen very carefully,” said a banking source.

By the end of this month, all businesses that have September as their incorporation month should have filed their tax registrations. (Plus, license renewals will be stalled for those companies that have not met the minimum requirements on their tax registration.)

Down the line, when companies start filing their annual taxes, oversight from their banks will get even more intense, sources add. (The first tax filings for companies - those registered in July 2023 - in the UAE will be end of December 2024.)

"Considering that almost 9 months has elapsed since the commencement of the staggered registration process, most entities are on track for their corporate registrations," said Girish Chand, Senior Partner at MCA Management Consultants. "In case of new entities, there is a case for improving the awareness as they are required to register for corporate tax within 3 months of their formation."

Registering is key

The important thing is to register by the deadline. “Even if the FTA asks the business to submit more documents or add more details to what was submitted, that’s still good enough,” said a business owner. “If the supporting documents are submitted on time, there is no penalty even if the TIN issuance takes a bit longer.”

By and large, most businesses are getting the hang of applying for tax registration as per their deadlines, audit industry sources say. Most of these submissions are done directly by the companies. Those who haven't done so use qualified tax agents.

“The FTA has been quite accommodating provided companies stick to deadlines,” said a business owner. “For one of our group companies, they had some additional questions before they issued the TIN. Everything has been a smooth process.”

Considering that almost 9 months has elapsed since the commencement of the staggered registration process, most entities are on track for their corporate registrations. In case of new entities formed, there is a case for improving the awareness as they are required to register for Corporate Tax within 3 months of their formation.