The introduction of corporate tax in the UAE marks a significant shift in the country’s business landscape. Implemented on June 1, 2023, the corporate tax is designed to diversify the economy and align with global tax standards. Here’s what you need to know about this new tax regime.

1. Who Needs to Register?

All businesses operating in the UAE, including local and foreign entities, must register for corporate tax. This includes:

• Companies incorporated in the UAE
• Branches of foreign companies
• Free zone companies (with exceptions)

However, not all businesses are subject to corporate tax immediately.

2. Where to Register

Businesses must register for corporate tax through the Federal Tax Authority (FTA) online portal. The registration process is straightforward, and companies need to provide relevant documents, including their trade license and financial statements.

3. Is Registration Mandatory for All Companies?

Yes, all companies registered in the UAE must register for corporate tax, regardless of whether they are subject to the tax or eligible for exemptions. This includes newly incorporated companies, which must comply with the registration requirement to avoid penalties.

4. Corporate Tax Rates: 0% vs. 9%

The UAE has introduced a tiered corporate tax structure:

• 0% Corporate Tax: Companies with a taxable income of up to AED 375,000 are exempt from corporate tax. However, there are specific criteria beyond income that must be met to qualify for this rate. For instance, certain businesses operating in designated free zones may also qualify for the 0% rate, provided they meet the regulatory requirements and do not conduct business with the UAE mainland.
• 9% Corporate Tax: Businesses with a taxable income exceeding AED 375,000 will be subject to a 9% corporate tax rate. This applies to most larger companies and is part of the UAE’s commitment to align with international tax standards.

5. Why is Registration Important?

Even if your business qualifies for the 0% tax rate, registering for corporate tax is essential for several reasons:

• Compliance: Registering ensures that your business complies with UAE tax laws, helping you avoid fines and legal issues.
• Transparency: Registration promotes transparency and credibility with partners, investors, and customers.
• Future Planning: As your business grows, having registered and maintained tax compliance will facilitate smoother operations and potential future tax obligations.

Conclusion

The introduction of corporate tax in the UAE is a pivotal development for businesses operating in the region. Understanding the registration requirements, tax rates, and compliance obligations is crucial for all companies, whether newly incorporated or well-established.

At KAIDZEN BIZ, we can assist and guide you through your business’s corporate tax compliance. Our experienced team is here to ensure that you navigate the new tax landscape smoothly and effectively.

Got questions? Reach out to our team – we’re here to help!