Abu Dhabi: The Federal Tax Authority (FTA) clarified on the registration timelines for those who are to pay corporate tax, to further explain the specific deadlines for different categories of taxable people subject to corporate tax, and to encourage them to submit their tax registration application to the FTA.
The FTA stated that this clarification neither amends nor seeks to amend any provision of the aforementioned legislation. Therefore, it is effective as of the date of implementation, i.e. March 1, 2024, unless stated otherwise. It emphasises the deadlines for various types of resident and non-resident corporates that are are taxable. It also addresses the registration requirements for those seeking exempt status from the FTA under the Corporate Tax Law. However, the timeline for applying for exemptions remains unchanged.
According to the clarification, all those taxable are required to submit a tax registration application to the FTA by the specified deadlines. Non-compliance will result in an administrative penalty of Dh10,000. The clarification includes a comprehensive analysis and examples to help those corporates that are taxable to understand how the timelines apply to their specific category.
The FTA encourages all affected to adhere to the specified timelines to ensure compliance and avoid any penalties. Therefore, it is crucial for all those corporates that are taxable to review the clarification and ensure timely submission of their Corporate Tax registration applications.
Key highlights
Those corporates that are incorporated or otherwise established or recognised before March 1, 2024 must submit their tax registration application for Corporate Tax based on the month of their licence issuance. If such a corporate does not hold a licence as of March 1, 2024, the application deadline is May 31, 2024.
If the taxable corporate holds an expired licence at March 1, 2024, the reference for submission is still based on the month of its original licence issuance. For those with multiple licences, the deadline is determined by the earliest issuance date, considering the year of issuance of the licence.
For those that are incorporated or otherwise established on or after March 1, 2024, they must submit a tax tegistration application within three months from the date of incorporation, establishment, or recognition. Also, those that are recognised under foreign legislation but managed and controlled in the UAE must submit a tax registration application within three months from the end of their financial year.
Juridical persons that are non-resident Persons prior to March 1, 2024, by virtue of having a permanent establishment in the UAE, must submit a tax registration application within nine months from the date of existence of the permanent establishment. The date of existence of the permanent establishment is when the permanent establishment is recognised for UAE Corporate Tax purposes.
Therefore, for a fixed place of permanent business establishment, the existence will be when all the requirements are met, including establishing a degree of permanence of six months in the UAE, starting from when the Corporate Tax Law came into force on June 1, 2023. If an international agreement provides a longer duration for recognising a permanent establishment, the international agreement prevails. Those non-resident by virtue of having a nexus in the UAE prior to March 1, 2024 must submit their application by May 31, 2024.
Those that are non-resident on or after March 1, 2024 by virtue of having a permanent establishment in the UAE must submit a tax registration application within six months from the date of existence of the permanent establishment. If an international agreement provides a longer duration for recognising a permanent establishment, the international agreement prevails. Those non-resident with a nexus in the UAE after on or after March 1, 2024 must submit a tax registration application within three months from the date of establishing a nexus in the UAE.
If the non-resident corporates have both a permanent establishment and a nexus in the UAE, the deadline to submit a tax registration application for Corporate Tax to the FTA is the earliest of their respective deadlines.
Starting from January 1, 2024, those corporates that are resident must submit a tax registration application for Corporate Tax if their turnover from businesses or business activities in the UAE exceeds Dh1 million within a Gregorian calendar year. If this threshold is met, a tax registration application must be submitted by March 31 of the subsequent Gregorian calendar year.
Those corporates that are non-residents must submit a tax registration application for Corporate Tax if their turnover from businesses or business activities derived via a permanent establishment in the UAE exceeds Dh1 million during a Gregorian calendar year, starting from January 1, 2024.
Such corporates are required to complete a tax registration application within three months of meeting the requirements of being subject to Corporate Tax. Those non-resident corporates will meet the requirements to be subject to Corporate Tax when they have a permanent establishment in the UAE and, in the Gregorian calendar year, they exceed the Dh1 million turnover threshold derived from the permanent establishment.
The first possible tax period, regardless if they are for a resident or a non-resident, will be the 2024 Gregorian calendar year. Any income generated before January 1, 2024 will not be subject to Corporate Tax, and the deadline to submit a tax registration application is March 31, 2025.
