Starting and running a business is about more than just the perks; it comes with significant responsibilities. Fulfilling these responsibilities not only helps in business regulation but also protects your business and sets it up for growth. One such responsibility that ensures compliance with regulation is corporate tax registration UAE.
If you are an entrepreneur unfamiliar with the corporate tax registration process, do not worry. In this article, we will explain in detail the steps to help you register. Before understanding the process, it is important to understand corporate tax.
What is Corporate Tax?
Corporate tax is a form of tax imposed on the profits of any business operating in the UAE. It is often referred to as business tax, profit tax, or corporation tax in some jurisdictions. This tax is paid to the government by calculating the total earnings and profits of a business.
The purpose of paying corporate tax is to contribute to the economy of the UAE, allowing the government to provide better facilities and improve the quality of life through advanced infrastructure, education, technology, and the healthcare system.
Who Needs to Pay Corporate Tax?
Remember that not all businesses need to pay corporate tax as it depends on various factors, including business type, location, and profit. The following key points can help you understand
- Businesses that are operating outside the UAE do not need to pay tax
- Each business type has different rules for corporate taxation
- Companies in certain Free Zones are eligible for tax exemption
- Smaller businesses with low profits do not have to pay business tax
- Standard corporate tax is 9% and only imposed on those businesses whose revenue is more than AED 375000
- Foreign companies that are operating online in the UAE are also eligible for tax exemption
- Non-profit organizations also do not pay taxes if they meet certain criteria set by the government.
Corporate Tax Registration Process
The Federal Tax Authority (FTA) requires businesses to go through a corporate tax registration process to ensure that their business is recognized as legal for tax purposes. Follow the steps explained below to register your business.
Determine the Eligibility
The first step is to determine if your business falls under the category of paying corporate tax or not. You can read Article 11 of the corporate tax for a better understanding. According to it, the following businesses are subject to paying tax
- Foreign entities registered and owning an office space in UAE need to pay tax
- Companies that have stable incomes and have been established for years also pay tax
- Companies that are not registered in UAE but earn profit from activities in UAE are also subjected to paying tax
- Individuals or companies earning more than AED 1000000 are required to pay tax.
Register for Value Added Tax (VAT)
It is mandatory to register for VAT to get a tax registration number for business activities. To register, open the FTA portal, create an account on the website, and log in with your email address.
Select “Register for VAT” and fill out the 8-step registration form. After submitting the form, you can track your VAT application on the website.
Application for Tax Registration Number (TRN)
The third step is to submit an application to the Federal Tax Authority for a tax registration number (TRN). The TRN is 15 digits, specific to each business, and required to pay tax. You are allowed to submit the application through the FTA’s official website.
Along with the application, you must provide other business details and documents, such as a business plan, trading license number, legal structure, and contact information. After submission, FTA will review your application and issue a TRN for your business.
Gather Documents for Registration
After getting TRN, complete the registration process by submitting the following documents to the relevant authority.
- Trade License
Photocopy and original Trade License issued by the Department of Economic Development or other relevant authorities.
- Memorandum of Association (MOA)
Sign a memorandum as the MOA outlines the roles and responsibilities of shareholders and owners. It also describes the business’s objective and structure.
- Passport copies
Passport copies of the owner, shareholders, and employees are also required for registration.
- Emirate ID
Copies of the owner and shareholder must be attached to the documents. Ensure that all the documents are verified and complete to avoid delay and ensure a smooth process.
Application for Tax Registration
After assembling the documents, you must apply for tax through the FTA website. This is an easy and simple process, as you do not have to go somewhere; you just file an application through an online platform.
Reread the information and details you provided about the company and documents to better understand them and avoid unwanted circumstances.
Approval by the Technical Committee
The FTA technical committee will review your registration application. The committee may require additional documents or proof to confirm the information provided in the application form.
This step is time-consuming, so patience is needed. Any proof or document requested by the FTA should be provided promptly to ensure smooth approval.
Pay your Tax
After completing the above steps, you will receive a tax registration number and certificate. These documents are proof that your business is registered with FTA and that you can pay taxes.
The tax amount you have to pay depends on multiple factors, such as business activities and profit. Keep in mind that there is no corporate tax registration UAE fee, but you have to pay a fee to a consultant if you hire one. It is recommended that you consult experts for better understanding.
Corporate Tax Period in UAE
In UAE, you can choose the tax period of your choice. Multiple steps should be followed.
- Understand the rules and regulations of UAE corporate tax.
- Choose a financial year-end that fits your company’s business cycle.
- It can be a calendar year starting from January 1 to December 31
- Instead of the calendar year, you can also choose the financial year that starts on April 1 and ends on March 31.
- For your comfort and simplified reporting, select the financial year selected by the parent company or other groups or the company.
- Seek advice from tax experts on which financial year suits your business needs.
- After selecting the right one, notify the FTA and ensure you meet the eligibility criteria and requirements.
Conclusion
At the end of this article, we hope it provided you with a comprehensive understanding of the corporate tax registration UAE process. UAE is an attractive place that offers many benefits and opportunities for growing your business.
However, it is essential to understand the tax responsibilities to avoid issues. Register your business within the first three months to take full advantage of UAE’s business market opportunities.
Understanding tax obligations is crucial and must be done on time so your business does not face any difficulties. It is a tricky process as each step requires proper knowledge and information about UAE tax rules. Reach out to Al Riyady for guidance and to set up your business in the UAE without facing any issues.
