Still need to register for corporate tax? Check out the licensing month of your business - and then speed up all the pre-registration processes. Image Credit: Shutterstock

Dubai: UAE businesses cannot afford to delay registering for corporate tax any longer – and it’s not just about the Dh10,000 fine for any late submissions.

The latest update from the UAE Ministry of Finance gives a clear timeline to companies to get their registration filings done. Not just that, businesses will need to do so based on the month when their licensing was done.

So, if the company was issued with a license in January, the corporate tax registration has to be done before end May, as per the latest Ministry announcement. The messaging is clear – all submissions and getting registered must be speeded up by those companies taking a rather sedate approach.

If a business license was issued in June, that entity has to register by August 31, 2024. For a December license, the final date will be December 31, 2024.

The last date for registration is ‘now primarily dependent on the licence issue date of the existing company,” said Girish Chand, Senior Partner at MCA Management Consultants.

“The penalty for late registration has been specified at Dh10,000, which is similar to the VAT and Excise Duty fine for delayed registration.”

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It was June 1, 2023 that the UAE opened registrations for corporate tax after its announcement that a 9 per cent tax will come into force. In the period thereafter, most of the bigger businesses have already sorted out their required paperwork. But based on market feedback, some of the mid- or smaller companies are still to get past the first regulatory requirement.

Existing companies have to refer their license issue and ensure they are registered within the given timelines. Say, an entity has its license issue date in January will be required to apply latest by May 31, 2024.

- Girish Chand of MCA Management Consultants

This is what the UAE tax authorities are sorting out with the latest update.

“The FTA (Federal Tax Authority) stressed the importance of submitting corporate tax registration applications in accordance with the timeframes specified,” said a statement.

For instance, ‘taxable persons with licenses issued in January and February regardless of the year license was issued must submit their corporate tax registration applications no later than May 31, 2024, to avoid tax law violations.”

If an entity does not have a license by the effective date of March 1, 2024, they must apply to register within three months – i.e., May 31, 2024.

If the taxable entity is in possession of multiple licenses – say, a business group with subsidiaries - the deadline for registration is based on the ‘prior issued license to determine the maximum timeframe to submit the corporate tax registration application’.

As per the latest updates from the UAE authorities, meet these deadlines on corporate tax registrations and the business will have done right. Image Credit: Supplied

Clock clearly is ticking

“Irrespective of the year of incorporation, taxpayers have to file the registration application within 30 to 90 days depending upon the licence issued in a month,” said Jitendra Gianchandani, Managing Director at the consultancy JCG. “And for new companies, fill out the application in 3 months.

“Most businesses were relaxed (on their approach to registering) and not taking registration up as a priority. Businesses are getting assessments and general advice before registration to avoid penalties for wrongful registrations, like as individuals or tax groups or even a single registration.”

Many taxpayers are evaluating their business modules before registration - either as a single entity or tax group - to avoid transfer pricing documentation hassles.

- Jitendra Gianchandani of JCG

Focus minds on deadlines

Again, the latest UAE tax authority’s clarity with the deadlines will focus the minds of business owners to get all the details done. There cannot be any laxity. Any longer.

As long as the details being provided are correct, ‘the entire process of registering is online and there are no difficulties in the process,” said Pankaj S. Jain, Managing Director at AskPankaj Tax Advisors.

What of single individual businesses?

An individual who is a UAE resident with business operations and who has exceeded the turnover threshold specified in the tax legislation, must apply to register for corporate tax by March 31, 2025. A non-resident individual with business turnover exceeding the specified threshold must apply to register within 3 months from the date of fulfilling the conditions set out to be a Taxable Person.

Administrative penalties will be imposed on those who do not submit their registration applications 'within the timeframes specified in the FTA’s decision' for each category of 'taxable persons'.