FTA announces deadlines for corporate tax registration

Overview

In the past few months, the Federal Tax Authority (FTA) has launched a comprehensive campaign aimed at raising public awareness about the obligations under the Corporate Income Tax (CIT) Law. This campaign included promoting CIT registration through social media and conducting awareness sessions throughout the UAE.

With the registration portal now open for a wide range of taxpayers, including individuals, foreign entities, partnerships, and free zone companies, there has been a notable uptick in registrations. However, the absence of specific registration deadlines led to some businesses postponing their registration, particularly those considering corporate restructuring or changes in licensing or ownership.

Despite the CIT Law empowering the FTA to establish registration deadlines, the lack of explicit deadlines led to a common belief that registration was only necessary before the submission of the first tax return, due nine months after the fiscal year-end.

On February 22, 2024, the FTA introduced definitive registration deadlines and announced a new AED 10,000 penalty for late registration applications, effective March 1, 2024. This announcement clarified the registration requirements, although there was some initial confusion among tax professionals and incorrect media reporting regarding the deadlines.

Registration Deadlines and Categories

For Resident Juridical Persons

Entities recognized under UAE law, including those in free zones with legal personalities distinct from their founders, and entities managed and controlled in the UAE but established under foreign laws, are categorized as resident juridical persons.

• Entities Established Before March 1, 2024: Registration deadlines are determined by the issuance date of their earliest license, with specific dates ranging from May 31, 2024, to November 30, 2024, based on the license issuance month.

• Entities Without a License as of March 1, 2024: These entities, primarily foreign businesses managed in the UAE, have until the end of May 2024 to register.

• Entities Established On or After March 1, 2024: These must register within three months from their establishment date, or within three months after their financial year-end if established under foreign laws.

For Non-Resident Juridical Persons

Non-resident entities are subject to different timelines based on their establishment date and whether they have a permanent establishment or nexus in the UAE.

Entities Established Before March 1, 2024: Must register within nine months from establishment or within three months from March 1, 2024, if they have a UAE nexus.

Entities Established On or After March 1, 2024: Required to register within six months from establishment or within three months from establishing a UAE nexus.

For Natural Persons

Individuals conducting business in the UAE with an annual turnover exceeding AED 1 million must register for CIT.

Resident Individuals: Must register by March 31 of the year following the one in which they exceeded the turnover threshold.

Non-Resident Individuals: Have three months from becoming a UAE taxpayer to register.

Exceptions and Exemptions

Certain entities, including government and government-controlled entities, as well as those in the extractive industries, are not required to register for CIT. Additionally, specific exempt entities, such as public benefit organizations and qualifying investment funds, have set registration and exemption application deadlines.

Conclusion

The FTA's establishment of clear CIT registration deadlines represents a significant policy shift towards ensuring compliance. It is crucial for businesses and individuals to understand the registration timelines applicable to their category to avoid the AED 10,000 penalty for late registration.

FTA