leading UAE free zones are seeing a clear spike in new licenses being issued. What these businesses should do is waste no time in getting their TIN too. Image Credit: Vijith Pulikkal/Gulf News

Dubai: Free zones in the UAE are stepping up their promotions – and with generous incentives to match – for new businesses looking at options on where to get their licenses from. Because unlike in the past, these businesses will also have to factor in their corporate tax obligations and whether they are eligible for 0 per cent tax.

Whichever free zone location they decide on, these new businesses have one priority – register for corporate tax. “It has been made very clear (by the UAE tax authorities) that all businesses regardless of whether they have a mainland, free zone or offshore license are required to register for corporate tax,” said Arun Gurung, Finance Director at Sovereign Corporate Services.

“There is no room for confusion on the actual corporate tax registration requirements.”

The various chambers of commerce in the country as well as leading free zones have all confirmed increases in new companies wanting to establish. In this regard, the various CEPA (Comprehensive Economic Partnership Agreement) deals that the UAE has now struck with multiple countries is also helping attract new business intake.

What should a new business do?

New businesses must file for tax registration 3 months from their date of incorporation. It’s only if this deadline is not met that fines for non-compliance come into effect.

“New businesses setting up in the UAE are at an advantage in understanding corporate tax requirements as they will incorporate into an established tax regime,” said Gurung.

“The only confusion around the CT registration process is whether this can be done in conjunction with obtaining the trade license… which it cannot. Otherwise, the confusion has primarily been for existing businesses in the UAE trying to understand their CT liabilities between business conducted on the mainland and from a free zone.”

Deadlines for existing businesses have been pre-determined, and failure will result in Dh10,000 fines as there has been a significant amount of time for companies to comply with corporate tax registration

- Arun Gurung of Sovereign Corporate Services

Status on trade licenses

Obviously, a trade license copy is part of the documentation required for tax registration. Again, keep in mind the 3-month deadline to file with the FTA (Federal Tax Authority). “The 3-month period does allow some time flexibility to register,” said Gurung. “Registering for corporate tax will provide the business with their Tax Identification Number (TIN).

“Once the registration is complete, it will take up to 20 working days for FTA to issue the TIN.”

What’s the FTA saying on registration?

The UAE tax regulator has been issuing updates and prompts on what businesses – existing and new – should be doing with their registration and getting the TIN.

FTA has emphasized that it ‘neither amends nor seeks to amend’ any provision of the legislation.

“The public clarification emphasises the deadlines for various types of taxable persons, both resident persons and non-resident persons,” the FTA statement said. “The timeline for applying for exemptions remains unchanged, as per FTA Decision No. 7 of 2023.”

All taxable persons are required to submit a tax registration application to the FTA by the specified deadlines

- Statement from Federal Tax Authority

Dubai free zones step up the pace

With more businesses waiting in the wings to launch, free zones in the UAE have been putting together some serious incentives to back their credentials.  The Meydan Free Zone has brought out the 'Dubai 247' initiative, whereby clients and partners have '24x7 physical as well as digital access to all services'. "To ensure that all transactions are done on schedule, the operations team is available in the client lobby to offer consultations, conduct transactions and issue legal documents at all times," said a statement.

Then there is Expo City offering ‘premium, campus-feel office spaces’ and multiple licencing options. These include dual licenses to ‘assist organisations that already hold a Dubai Department of Economy and Tourism (DET) licence, as well as a multi-year licence for businesses looking to set up long term’.

"Our free zone is already attracting new businesses, innovators, entrepreneurs and investors, and is fast becoming a critical location for any organisation that wants to be at the forefront of this thriving commercial district," said Manal AlBayat, Chief Engagement Officer at Expo City Dubai.