The UAE implements a penalty of AED 10,000 for delayed corporate tax registration.

UAE Corporate Tax

On February 27, 2024, the Ministry of Finance unveiled a fresh measure: a penalty of AED 10,000 for corporations registering for tax after the specified deadline. This initiative aims to promote compliance with tax laws and prompt registration. The penalty mirrors fines for delayed registration in excise and value-added taxes. Keep abreast of tax regulations. Cabinet Decision No. 10 of 2024, revealed on February 27, 2024, revises the schedule of violations and administrative penalties set forth in Cabinet Decision No. 75 of 2023. The latter delineated penalties imposed by the Federal Tax Authority (FTA) for breaches related to the Corporate Tax Law, effective from August 1, 2023. The updated penalty structure is set to come into effect from March 1, 2024. Introduced on June 1, 2023, the Corporate Tax Law establishes the UAE’s corporate tax as one of the world’s most competitive, imposing a nine percent tax rate on companies earning profits of Dh 375,000 and above. In December 2023, the Federal Tax Authority (FTA) released a handbook identifying the entities accountable for corporate tax obligations in the UAE. The FTA urged individuals generating income or involved in business operations, either entirely or partially, within the UAE to refer to the updated guide for a thorough grasp of the Corporate Tax Law, along with pertinent decisions and resources available on the FTA’s website. Furthermore, the UAE government has introduced Small Business Relief (SBR) to ease the burden of corporate tax compliance for small enterprises. This relief is applicable to resident taxable entities, whether individuals or entities, with a gross business income of up to Dh 3 million in the applicable tax period and any prior tax periods ending on or before December 31, 2026.

Schedule for the Tax Registration of Resident Legal Entities

A legal entity categorized as a Resident Entity, whether established or officially recognized prior to the enactment of this Decision, must submit the Tax Registration application according to the outlined timetable:

• 1 January – 31 January: Deadline – 31 May 2024
• 1 February – 28/29 February: Deadline – 31 May 2024
• 1 March – 31 March: Deadline – 30 June 2024
• 1 April – 30 April: Deadline – 30 June 2024
• 1 May – 31 May: Deadline – 31 July 2024
• 1 June – 30 June: Deadline – 31 August 2024
• 1 July – 31 July: Deadline – 30 September 2024
• 1 August – 31 August: Deadline – 31 October 2024
• 1 September – 30 September: Deadline – 31 October 2024
• 1 October – 31 October: Deadline – 30 November 2024
• 1 November – 30 November: Deadline – 30 November 2024
• 1 December – 31 December: Deadline – 31 December 2024

For entities lacking a license at the time this Decision takes effect:

1. Within three months from the date this Decision becomes effective

If a legal entity holds multiple licenses, the one issued first will be utilized.

1. A legal entity classified as a Resident Entity, whether established or recognized after the effective date of this Decision, must submit a Tax Registration application, as outlined below:

Entities falling under the classification of legal persons, including those incorporated or recognized under the relevant laws of the State, such as Free Zone entities, must submit their Tax Registration application within three months from the date of their incorporation, establishment, or recognition. Conversely, entities incorporated or recognized under the laws of a foreign jurisdiction, which are effectively managed and controlled within the State, must submit their Tax Registration application within three months from the end of their Financial Year. This timeline ensures adherence to tax regulations and streamlines the registration process for businesses operating in various capacities.

Guidelines for Tax Registration of Non-Resident Legal Entities in the UAE

1. Non-Resident Legal Entities, in existence before the effective date of this Decision, must submit their Tax Registration application according to specified timelines.
2. Non-Resident Legal Entities commencing business activities in the UAE after the effective date of this Decision must submit a Tax Registration application according to the schedule below. Entities with a Permanent Establishment in the State should submit within six months from the establishment date, while those with a connection in the State must submit within three months from the establishment of the connection

Timelines for Tax Registration of Individuals(Natural Persons) in the UAE

Individuals involved in business or business activities within the UAE must follow the designated timeline for Tax Registration, detailed as follows:

• Resident Individuals: Individuals engaging in business or business activities during the 2024 Gregorian calendar year or thereafter, with a total turnover exceeding the specified threshold, must submit their Tax Registration application by March 31 of the following Gregorian calendar year.
• Non-Resident Individuals: Individuals participating in business or business activities during the 2024 Gregorian calendar year or later, with a total turnover surpassing the threshold specified in the relevant tax legislation, are required to submit their Tax Registration application within three months from the point of meeting the criteria for being subject to tax.

Failure by individuals mentioned in the preceding sections of this Decision to submit a Tax Registration application within the specified timelines will result in Administrative Penalties as detailed in Cabinet Decision No. 75 of 2023. This Decision will be published in the Official Gazette and becomes effective from March 1, 2024.