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A Quick Guide to Corporate Tax Registration in the UAE
FTA has invited all taxpayers in the state to register for corporate tax.
FTA has invited all taxpayers in the state to register for corporate tax.
Eligibility for Early Registration
Currently the registration is open for Public Joint Stock Companies ‘PJSC’, Private Shareholder Companies ‘PSC’, and other private entities such as Limited Liability Company “LLC”. Registration is required for all legal entities except those are Exempt Persons, unless insofar Exempt Persons conduct a Business or a Business Activity. Non-resident companies such as a Branch of a foreign company, and Sole Establishment should not register for now, but wait for further clarification from the FTA.
Distinction from VAT Registration
The UAE Corporate Tax ‘CT’ registration is a separate process from VAT registration. Companies registered for VAT should also register for Corporate Tax ‘CT’, and receive their Tax Registration Number “TRN”, which is unique per each Taxpayer.
CT Registration Assistance
Companies that are invited for early registration should follow the FTA’s guidelines for the registration process, and we would be glad to help you throughout the registration process. As an FTA Approved Tax Agent, Alliance Prime is a leading provider of auditing, accounting, taxation, and advisory services in the UAE. Our team’s experts will guide you through the complex laws and regulations of the UAE, including the Corporate Tax Registration process.
Why is Alliance Prime the best Tax Consultancy in Dubai?
Alliance Prime is a leading provider of auditing, accounting, taxation, and advisory services in the UAE. Our expert team will guide you through the complex laws and regulations of UAE, including Corporate Tax, VAT, Excise Tax, Accounting and Bookkeeping, ESR, Financial Advisory, ERP, etc. We stay up-to-date with the latest changes in laws and regulations in the UAE. If you’re looking for reliable and professional auditing, accounting, taxation, and advisory services in the UAE, look no further than Alliance Prime.
For any Corporate Tax or related enquiry, visit localhost/alliance-acc/ or contact us at- +971 58 825 7795 or Email us at:- contact@alliance-acc.com
Ministerial Decision No (120) of 2023 on Transitional Rules for Corporate Tax.
UAE Corporate Tax Update📣
The Ministry of Finance UAE has issued Ministerial Decision No (120) of 2023 on Transitional Rules for Corporate Tax.
The decision includes adjustments for the opening balance sheet under the Corporate Tax Law and offers significant clarifications for businesses to transition smoothly before and after the enactment of the Law.
The decision applies to certain assets and liabilities held by businesses before the Corporate Tax Law comes into effect, such as:
- Immovable property
- Financial assets
When filing their initial Tax Return, businesses have the opportunity to make adjustments to the tax treatment of their assets and liabilities, in accordance with specific regulations. It is crucial for businesses to carefully consider and determine the approach they wish to take in this regard.
Under normal circumstances, their decision would be considered permanent. However, it is important to note that there may be certain exceptional situations or specific conditions where this permanence could be subject to change or reconsideration. These special circumstances would require additional evaluation or consideration before any adjustments or alterations to the initial decision are made.
There is further flexibility for the real estate sector
Companies with immovable property recorded on a historical cost basis, before the Corporate Tax comes into effect, can select the basis of the relief, using either:
✅ a time apportionment method; or
✅ valuation method
For details, refer the detailed copy of the Ministerial Decision here: https://mof.gov.ae/tax-legislation/
Why is Alliance Prime the best Tax Consultancy in Dubai?
Alliance Prime is a leading provider of auditing, accounting, taxation, and advisory services in the UAE. Our expert team will guide you through the complex laws and regulations of UAE, including Corporate Tax, VAT, Excise Tax, Accounting and Bookkeeping, ESR, Financial Advisory, ERP, etc. We stay up-to-date with the latest changes in laws and regulations in the UAE. If you’re looking for reliable and professional auditing, accounting, taxation, and advisory services in the UAE, look no further than Alliance Prime.
For any Corporate Tax or related enquiry, visit localhost/alliance-acc/ or contact us at- +971 58 825 7795 or Email us at:- contact@alliance-acc.com
UAE Corporate Tax Registration is Open from May 15, Monday
The registration for UAE Corporate Tax has been started on May 15th, Monday through the EmaraTax platform.
The UAE’s Federal Tax Authority (FTA) has started registration for corporate tax through the EmaraTax digital tax services platform for public joint stock companies and private firms from Monday, May 15, 2023.
Under the Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, PJSCs and private firms will be subject to a nine per cent corporate tax from the beginning of their first financial year that starts on or after June 1, 2023. Therefore, they must register and obtain a tax registration number for corporate tax purposes.
In line with Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (“Corporate Tax Law”), which stipulates that Taxable Persons will become subject to Corporate Tax from the beginning of their first financial year that starts on or after 1st June 2023.
Therefore, Taxable Persons must register and obtain a Tax Registration Number for Corporate Tax purposes.
UAE Corporate Tax Registration
The FTA invited all Taxable Persons that are Public Joint Stock Companies and Private Companies resident in the UAE for Corporate Tax purposes to register with the FTA, noting that this will not cover Free Zone Persons for whom Corporate Tax Registration will be made available at a later stage.
Similarly, Corporate Tax registration for other categories of Taxable Persons, such as natural persons conducting Business or Business Activity as to be specified by a Cabinet Decision, will open at a later date.
The Authority explained that early Corporate Tax registration will allow ample time for companies and businesses to comply with their legal obligations.
For the time being, the Corporate Tax registration process will be available to individual legal entities only.
Entities that would like to form a Corporate Tax Group are required to register individually first, and then, at a later date, will be able to apply to form a Corporate Tax Group.
The UAE Ministry of Finance has also issued a guide explaining all aspects of the upcoming Corporate Tax in the country.
The guide aims to explain all aspects of the taxation guidelines and explains every single article in the law. Click here to download the Corporate Tax Guide issued by the UAE Ministry of Finance.
Why is Alliance Prime the best Tax Consultancy in Dubai?
Alliance Prime is a leading provider of auditing, accounting, taxation, and advisory services in the UAE. Our expert team will guide you through the complex laws and regulations of UAE, including Corporate Tax, VAT, Excise Tax, Accounting and Bookkeeping, ESR, Financial Advisory, ERP, etc. We stay up-to-date with the latest changes in laws and regulations in the UAE. If you’re looking for reliable and professional auditing, accounting, taxation, and advisory services in the UAE, look no further than Alliance Prime.
For any Accounting or Taxation or related enquiry contact us at- +971 58 825 7795 or Email us at:- contact@alliance-acc.com
The Muwafaq Package: Innovative tax solutions to encourage SMEs in the UAE
The initiative offers innovative tax solutions and digital learning materials to facilitate self-compliance, along with quick and precise procedures.
The United Arab Emirates (UAE) has always been at the forefront of promoting and supporting small and medium-sized enterprises (SMEs) in the country. Inline with this, the Federal Tax Authority (FTA) has launched the Muwafaq Package which aims to make it easier for small and medium-sized enterprises (SMEs) to comply with tax regulations and conduct their business practices. The Muwafaq Package is a significant and fast project that seeks to create positive change in the SME sector quickly and adopt a new approach to government activities.
Benefits of Muwafaq Package
The package offers various benefits, including financial assistance, advisory services, and access to new markets. In addition to these benefits, the Muwafaq Package also has an impact on VAT and corporate tax in the UAE.
The Muwafaq Package provides several financial incentives to SMEs, including a zero-interest loan for six months and a 50% reduction in the fees for the SME registration and licensing process. These incentives help SMEs overcome their cash flow problems and reduce their operational costs. Moreover, the package offers SMEs access to credit facilities and loan guarantees, enabling them to secure funds to invest in their businesses, expand their operations, and create new job opportunities.
One of the primary benefits of the Muwafaq Package is the financial assistance provided to SMEs. The package offers several financial incentives, including a zero-interest loan for six months and a 50% reduction in the fees for the SME registration and licensing process. These incentives help SMEs overcome their cash flow problems and reduce their operational costs.
The financial assistance provided by the Muwafaq Package has a significant impact on VAT in the UAE. Since SMEs are the primary beneficiaries of the package, they are more likely to be eligible for the VAT refund scheme. The VAT refund scheme allows eligible businesses to recover the VAT they have paid on their purchases. By providing SMEs with financial assistance, the Muwafaq Package increases their chances of being eligible for the VAT refund scheme, thus reducing their VAT costs.
Moreover, the package offers SMEs access to credit facilities and loan guarantees. This enables SMEs to secure the necessary funds to invest in their businesses, expand their operations, and create new job opportunities. By providing SMEs with access to credit facilities, the package helps SMEs strengthen their financial position and grow their businesses.
Impact on VAT and Corporate Tax in the UAE
The Muwafaq Package has an impact on corporate tax in the UAE. One of the incentives offered by the package is a waiver of the administrative penalties imposed on businesses for late payment of corporate tax. This waiver is applicable to all businesses, including SMEs. By waiving the administrative penalties, the government encourages businesses to comply with their tax obligations, reducing the burden on SMEs and promoting a more favorable business environment in the UAE.
Another significant benefit of the Muwafaq Package is the advisory services provided to SMEs. These advisory services help SMEs overcome the challenges of running a business and make informed decisions that lead to their success. The advisory services provided by the Muwafaq Package also have an impact on VAT and corporate tax in the UAE. The package offers SMEs access to expert advice on various aspects of their business, including financial management, marketing, and legal compliance. This advice helps SMEs make informed decisions and comply with their tax obligations, reducing the risk of penalties and fines for non-compliance.
The package also provides SMEs with access to new markets through various initiatives. For example, the UAE government has launched an online platform called “Made in UAE” to showcase locally produced goods and services. SMEs can use this platform to promote their products and services and reach new customers.
Additionally, the package includes initiatives to promote e-commerce and digital transformation among SMEs. These initiatives help SMEs leverage technology to improve their operations, increase efficiency, and reach new markets.
Conclusion
The Muwafaq Package is a significant step towards supporting SMEs in the UAE. The package offers various benefits, including financial assistance, advisory services, and access to new markets. In addition to these benefits, the Muwafaq Package has an impact on VAT and corporate tax in the UAE. The financial incentives provided by the package increase the chances of SMEs being eligible for the VAT refund scheme, while the waiver of administrative penalties promotes tax compliance. The advisory services and initiatives to promote e-commerce and digital transformation also help SMEs comply with their tax obligations and reduce the risk of penalties and fines. Overall, the Muwafaq Package promotes a more favorable business environment for SMEs in the UAE and contributes to the growth and development of the country’s economy.
Why is Alliance Prime the best Tax Consultancy in Dubai?
Alliance Prime is a leading provider of auditing, accounting, taxation, and advisory services in the UAE. Our expert team will guide you through the complex laws and regulations of UAE, including Corporate Tax, VAT, Excise Tax, Accounting and Bookkeeping, ESR, Financial Advisory, ERP, etc. We stay up-to-date with the latest changes in laws and regulations in the UAE. If you’re looking for reliable and professional auditing, accounting, taxation, and advisory services in the UAE, look no further than Alliance Prime.
For any Accounting or Taxation or related enquiry contact us at- +971 58 825 7795 or Email us at:- contact@alliance-acc.com
Federal Tax Authority board reviews corporate tax implementation progress
Federal Tax Authority to launch 4 ‘transformative’ projects to boost country’s competitiveness.
As the UAE’s Federal Tax Authority gears up to introduce corporate tax this year, the board has given approval to the 2022 financial statement, while also reviewing the development plans and performance indicators. As per Dubai Government Media Office, during the second meeting this year, the board was also informed about updates regarding the Federal Decree Law on the Taxation of Corporations and Businesses, as well as the FTA’s readiness and procedures leading up to its implementation.
During the meeting, which was presided over by Sheikh Maktoum bin Mohammed, Deputy Ruler of Dubai, Deputy Prime Minister, Minister of Finance, and FTA board chairman, the attendees were also updated on the collaboration between the Ministry of Finance and the FTA to ensure the smooth implementation of policies and decisions related to the new corporate tax law, according to the statement.
The introduction of this law aims to enhance the UAE’s global position as a prime destination for business and investment that complies with the highest international standards of tax transparency.
Last year, the UAE implemented a federal corporate tax law with a standard statutory rate of 9% that will become applicable for businesses commencing their financial year from June 1st onwards.
In December, the country passed the federal corporate tax law, which included companies earning more than Dh375,000 in the scope of the corporate tax category.
The board was also briefed about the progress the FTA has made in terms of its “transformational projects”, aimed at enhancing the country’s competitiveness.
According to the Media Office, the Federal Tax Authority is currently executing several significant projects, including the Muwafaq initiative aimed at enhancing ease of doing business and tax compliance within the small and medium-sized enterprises sector, the introduction of a Specialised Tax Agent, implementation of the Electronic Invoicing System, and the corporate tax system.
During its meeting, chaired by Sheikh Maktoum, the FTA Board of Directors reviewed the progress made in implementing the integrated tax system, as well as the results of the successful launch of the FTA’s advanced integrated digital tax services platform, EmaraTax.
The platform was activated in December 2022, with all services now available for taxpayers.
A comprehensive report reviewed by the FTA Board of Directors on the achievements, results, and developments of the Authority’s existing projects reveals that the number of registrants for Value Added Tax (VAT) has reached 351,514, while there are 1,549 registrants for Excise Tax, and 467 Tax Agents.
The report also outlines key statistics regarding VAT and Excise Tax, periodic returns, the payment of taxes, and refund requests that have been processed.
According to the report, the Federal Tax Authority has approved new applications from citizens requesting refunds on the tax they incurred for building their new homes, worth more than AED131m in February and March 2023, a growth of 13.92 per cent from last year.
This is a direct result of the seamless procedures implemented by the FTA to enable citizens to recover the tax incurred on building their new homes.
Why is Alliance Prime the best Tax Consultancy in Dubai?
Alliance Prime is a leading provider of auditing, accounting, taxation, and advisory services in the UAE. Our expert team will guide you through the complex laws and regulations of UAE, including Corporate Tax, VAT, Excise Tax, Accounting and Bookkeeping, ESR, Financial Advisory, ERP, etc. We stay up-to-date with the latest changes in laws and regulations in the UAE. If you’re looking for reliable and professional auditing, accounting, taxation, and advisory services in the UAE, look no further than Alliance Prime.
For any Corporate Tax, enquiry contact us at- +971 58 825 7795 or Email us at:- contact@alliance-acc.com
UAE Corporate Tax: Conditions for Change in Tax Period
Conditions for Change in Tax Period for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses.
For the purposes of Article 58 of Federal Decree-Law No. 47 of 2022 referred to above, the Taxable Person can make an application to the Authority to change the start and end date of the Tax Period, or use a different Tax Period, where the following conditions are met:
- The change is for one of the following reasons:
-
- The Taxable Person’s liquidation
- Aligning the Resident Taxable Person’s Financial Year with the Financial Year of another Resident Person for the purpose of forming a Tax Group or joining an existing Tax Group, or aligning the Taxable Person’s Financial Year with the Financial Year of its domestic or foreign head office, subsidiary, parent, or ultimate parent company, for the purpose of financial reporting, or to benefit from a tax relief available under the Federal Decree-Law No. 47 of 2022 referred to above or under the legislation of a foreign jurisdiction (or)
- There is valid commercial, economic, or legal reason to change the Tax Period.
- The Taxable Person has not yet filed the Tax Return for the Tax Period he is applying to change.
- The application for change in Tax Period is in respect of any of following:
- Extend the current Tax Period to be a maximum of 18 months; or
- Shorten the next Tax Period to be between 6 and 12 months.
- The application shall be made before the lapse of 6 months from the end of the original Tax Period.
- Where the Taxable Person filed an application to shorten a Tax Period, the application shall not be in respect of a prior or current Tax Period.
Any provisions contrary to or inconsistent with the provisions of this Decision shall be abrogated. Implementation of the Decision shall be published in the Official Gazette and shall come into effect as of 1 June 2023. All Cabinet Decisions and Ministerial Decisions issued relating to the Corporate Tax Law are available on the Ministry of Finance’s website: www.mof.gov.ae.
Why is Alliance Prime the best Tax Consultancy in Dubai?
Alliance Prime is a leading provider of auditing, accounting, taxation, and advisory services in the UAE. Our expert team will guide you through the complex laws and regulations of UAE, including Corporate Tax, VAT, Excise Tax, Accounting and Bookkeeping, ESR, Financial Advisory, ERP, etc. We stay up-to-date with the latest changes in laws and regulations in UAE. If you’re looking for reliable and professional auditing, accounting, taxation, and advisory services in the UAE, look no further than Alliance Prime.
For any Corporate Tax, enquiry contact us at- +971 58 825 7795 or Email us at:- contact@alliance-acc.com
UAE CT Update: Corporate Tax Exemption for Public and Community Welfare Entities
Entities eligible for exemption are those that prioritize philanthropy, community services, and corporate social responsibility initiatives
The UAE Ministry of Finance (MoF) said public benefit entities that contribute to the welfare of society are eligible for tax exemptions under the country’s corporate tax law.
“The MoF unveiled a UAE Cabinet new implementing decision relating to qualifying public benefit entities for the purposes of the corporate tax law, which is designed to ensure that entities existing and operating for the wider public benefit are eligible for tax exemption,” the ministry of finance said in a tweet.
The tax exemption is designed to reflect these entities’ important role in the country, which often includes religious, charitable, scientific, educational or cultural value. The UAE said to qualify for the exemption, eligible entities must meet the conditions specified in Article 9 of the corporate tax law and must maintain compliance with all relevant federal and local laws.
The ministry called on all qualifying public benefit entities to register with the UAE Federal Tax Authority and obtain a tax registration number for corporate tax purposes.
The MoF unveiled a UAE Cabinet new implementing decision relating to Qualifying Public Benefit Entities for the purposes of the Corporate Tax Law, which is designed to ensure that entities existing and operating for the wider public benefit are eligible for tax exemption.#UAECT pic.twitter.com/e0fYR1LbOt
— وزارة المالية | الإمارات (@MOFUAE) April 23, 2023
The entities must also inform the ministry of any changes that may affect their status as qualifying public benefit entity.
In addition, various reporting obligations apply to Qualifying Public Benefit Entities, principally to check that they continue to meet the criteria for approval.
This Cabinet Decision also provides further certainty and transparency for taxpayers in relation to their deductible expenditure under Article 33 of the Corporate Tax Law, as donations and gifts will be allowed as deductible expenditure for Corporate Tax purposes if they are made to a Qualifying Public Benefit Entity listed in the Cabinet Decision.
Earlier, the Ministry announced corporate tax exemptions for non-resident persons, government entities, government-controlled entities, as well as extractive businesses and non-extractive natural resource businesses.
For any Corporate Tax, enquiry contact us at- +971 58 825 7795 or Email us at:- contact@alliance-acc.com
Source: https://mof.gov.ae/
What Is Transfer Pricing in Dubai?
In general, transfer pricing refers to the price agreed for transfer of goods, services and technology between related parties and connected persons. The UAE CT regime will have transfer pricing rules to ensure that the price of a transaction is not influenced by the relationship between the parties involved. In order to achieve this outcome, the UAE will apply the internationally recognised “Arm’s Length” principle to transactions and arrangements between related parties and connected persons.
Arm’s length Principle (ALP) ALP in case of related parties and connected persons transactions to be determined as per internationally recognised transfer pricing methods (for example comparable uncontrolled price method, resale price method, cost plus method, comparable profits method & profit split method) or under different method (s) where specified method cannot determine ALP; Provisions of ALP are applicable to both related parties and connected persons.
All Related Party transactions and transactions with Connected Persons will need to comply with transfer pricing rules and the arm’s length principle as set out in the OECD Transfer Pricing Guidelines.
Transfer Pricing documentation:
Business will be required to submit a disclosure containing information regarding their transactions with Related Parties and Connected Persons.
A business will also need to maintain a master and local file (with format and content consistent with the requirements prescribed under OECD BEPS Action 13) where the arm’s length value of their Related Party transactions exceeds a certain threshold in the relevant tax period.
The New UAE Transfer Pricing Regime: How would rules look like? Potential content of the TP documentation requirements
CbC report
CbC report requirements
- Revenue
- Profit before tax
- Cash tax paid
- Current tax accrual
- Capital and retained earnings
- Net book value of tangible assets
- Number of employees
- Complete list of entities and permanent establishment
Master File
Master File requirements
- Group wide description including supply chain, value drivers, main markets, high level functional analysis, details of business changes
- High level description of IP strategies, IP location and R&D management and location
- High level description of group financing arrangements
- Consolidated group accounts
- Description of APAs or other rulings
Local File
Local File requirements Transactional/entity specific:
- Local management structure
- Detailed functional analysis
- Economic analysis and reconciliations of TP to accounts
TP disclosure form
- TP disclosure form requirements
- Direct reading of crucial TP information Ownership information (beneficial owner, actual ownership, ownership %)
- Information on the profitability of each related party
The FTA is recognizing its fifth year since implementing Excise Tax.
The Federal Tax Authority (FTA) declared that the implementation of the Excise Tax has been a great success.
Excise Tax was implemented on the 1st of October 2017. Excise Tax was applied to Excisable Goods such as Carbonated Drinks at the rate of 50%, Tobacco Products, and Energy Drinks at the rate of 100%. On the 1st of December 2019, the scope of excise goods was expanded to Sweetened Drinks at the rate of 50% and Electronic Smoking Devices and Tools along with Liquids used in electronic smoking devices and tools at the rate of 100%.
FTA revealed that the total number of Excise Registrants grew continuously from 309 to 1,469 registrants by the end of September 2022. The cumulative growth was 375.41% between the end of 2017 and the end of September 2022.
FTA confirmed that the total number of products registered as Excise Goods increased from 3,078 products by the end of 2017 to 30,834 products in 2022. According to the data, there would be a startling cumulative growth rate of 901.75% from December 31, 2017, and September 30, 2022.
The FTA committee for approving Excise Prices of Goods that is subject to Tax continues to meet the law when approving the prices of goods. Recognizing and classifying products, as well as responding to requests from retailers and shops to adjust product prices or classifications in accordance with specific requirements.
H.E. Al Bustani, the FTA Director General stated that;
“The decision to expand the scope of Excise Goods meant that the excise tax scope would include sweetened drinks, electronic smoking devices and tools and the liquids used within, in addition to tobacco and tobacco products, energy drinks, and carbonated beverages. The decision followed directives from the wise leadership to accelerate the pace of progress towards a safe and healthy society, by reducing the consumption of harmful goods, preventing the damage they inflict onto the community, and combating diseases resulting from consumption patterns harmful to public health, in addition to developing the resources needed to support the expansion of government services to members of the community.”
What Is Corporate Tax in the UAE?
Corporate tax is a form of direct tax levied on the net income or profit of corporations and other entities from their business.
Objectives of CT
By introducing the CT, the UAE aims to:
- Cement its position as a leading global hub for business and investment
- Accelerate its development and transformation to achieve its strategic objectives
- Reaffirm its commitment to meeting international standards for tax transparency and preventing harmful tax practices.
Scope
CT will apply to:
- All businesses and individuals conducting business activities under a commercial license in the UAE
- Free zone businesses (The UAE CT regime will continue to honour the CT incentives currently being offered to free zone businesses that comply with all regulatory requirements and that do not conduct business set up in the UAE’s mainland.)
- Foreign entities and individuals only if they conduct a trade or business in the UAE in an ongoing or regular manner
- Banking operations
- Businesses engaged in real estate management, construction, development, agency and brokerage activities.
Exemptions from CT
Below are the rules regarding exemptions from the corporate tax.
- Businesses engaged in the extraction of natural resources are exempt from CT as these businesses will remain subject to the current
- Emirate level corporate taxation.
- Dividends and capital gains earned by a UAE business from its qualifying shareholdings will be exempt from CT.
- Qualifying intra-group transactions and reorganizations will not be subject to CT, provided the necessary conditions are met.
Additionally, CT will not apply to:
- An individual earnings salary and other employment income, whether received from the public or the private sector
- Interest and other income earned by an individual from bank deposits or saving schemes
- A foreign investor’s income earned from dividends, capital gains, interest, royalties and other investment returns investment in real estate by individuals in their personal capacity.
- Dividends, capital gains and other income earned by individuals from owning shares or other securities in their personal capacity.
Read FAQs about the UAE’s corporate tax on the website of Ministry of Finance.
Text sourced from the website of Ministry of Finance.