The United Arab Emirates (UAE) is always famous for its attractive and business-friendly practices. However, in addition to this “friendliness,” there is a need to enforce tax laws and regulations in the State. The idea is to keep the overall tax system smooth and benefit the country’s economy. As a result, the tax system applies penalties to reduce instances of violations. Hence, we see a recent development where there is a penalty if a taxable person fails to register for corporate tax. This indicates the seriousness and will of the UAE government, as they are not only concerned about tax collection. They want to keep the overall tax system compliant. Therefore, the corporate tax registration penalty is AED10,000 for a taxable person who fails to apply for registration within the stipulated timeline. This blog discusses the corporation tax registration timeline for various taxable persons and the associated penalty.
Corporate Tax Registration Timeline
As per UAE tax law (Article 51), a taxable person must register for corporate tax with FTA within the stipulated timeframe. Consequently, the taxable person will get a tax registration number. However, there was no timeline prescribed initially in the tax law. Thus, the FTA Decision No. 3 of 2024 specifies the corporate tax registration timeline for various taxable persons. As a result, the decision is effective from March 1, 2024, for juridical persons or natural persons who have a resident or non-resident status.
Resident Juridical Persons
The decision specifies that a juridical person who is resident (incorporated, established, or otherwise recognized) before March 1, 2024, must apply to register for CT within the following timeframes:
| Month of License Issuance (year is irrelevant) | Deadline to apply for Corporate Tax Registration |
| January or February | 31-May-24 |
| March or April | 30-Jun-24 |
| May | 31-Jul-24 |
| June | 31-Aug-24 |
| July | 30-Sep-24 |
| August or September | 31-Oct-24 |
| October or November | 30-Nov-24 |
| December | 31-Dec-24 |
| When a person does not have a License at the effective date of this Decision (1st March 2024.) | Three months from the effective date of this Decision i.e. 1st March, 2024. |
*In cases where a juridical person has more than one license, the license with the earliest issuance date shall be used.
Furthermore, a resident person (incorporated, established, or otherwise recognized) after March 1, 2024, must apply to register for CT within the following timeframes:
| Type of Juridical Persons | Deadline to apply for Corporate Tax Registration |
| When a taxable person is incorporated or recognized in the State or Free Zone as per applicable legislation. | 3 Months from the date of Incorporation or establishment. |
| When a taxable person is incorporated or recognized in the foreign jurisdiction as per applicable legislation but effectively managed and controlled in the State. | 3 Months from the end of the financial year of the person. |
Non-Resident Juridical Persons:
A juridical person who is a non-resident person before March 1, 2024, must apply to register for CT within the following timeframes:
| Type of Juridical Persons | Deadline to apply for Corporate Tax Registration |
| When a person has a permanent establishment in the State. | 9 Months from the date of existence of the permanent establishment. |
| When a person has a Nexus in the State. | 3 Months from the effective date of this Decision i.e. 1st March, 2024. |
A juridical person who is a non-resident person on or after March 1, 2024, must apply to register for CT within the following timeframes:
| Type of Juridical Persons | Deadline to apply for Corporate Tax Registration |
| When a person has a permanent establishment in the State. | 6 Months from the date of existence of the permanent establishment. |
| When a person has a Nexus in the State. | 3 Months from the date of Nexus establishment. |
Natural Persons:
A natural person who is a resident conducting a business activity during the Georgian calendar year 2024 and has surpassed the turnover threshold as per the relevant tax legislation must apply for corporate tax registration by March 31 of the following Gregorian calendar year.
A natural person who is a non-resident person conducting a business or business activity during the Georgian calendar year 2024 and subsequent years and whose turnover exceeds the relevant threshold must apply for corporate tax registration within three months from the date of fulfilling the conditions for becoming a taxable person.
Corporate Tax Registration Penalty:
The decision stipulates clearly that failure to comply with the registration timeline will result in administrative penalties. However, these will be according to Cabinet Decision No. 75 of 2023, which is now updated through Cabinet Decision No. 10 of 2024. Accordingly, the decision dictates that an AED 10,000 penalty will apply to the taxable person if it does meet the corporate tax registration timeline specified in the tax law. Thus, a delay in registration will result in a huge penalty. Therefore, one must consider consulting a tax expert.
Conclusion:
In conclusion, enforcement of corporate tax registration regulations in the United Arab Emirates reflects the government’s commitment to maintaining a fair and compliant tax system. As a result, the recent implementation of penalties for failure to register for corporate tax underscores the seriousness of adhering to tax laws and regulations. With the introduction of specific corporate tax registration timelines outlined in FTA Decision No. 3 of 2024, both resident and non-resident persons are required to comply within stipulated timeframes or face administrative penalties. Therefore, the penalty of AED 10,000 serves as a deterrent to ensure timely compliance and underscores the importance of contributing to the country’s economy through tax obligations. This proactive approach not only ensures revenue collection but also fosters a conducive environment for businesses to thrive in the UAE.
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Disclaimer:
The information provided might be outdated with time as there is continuous updating of the tax laws and regulations. Therefore, this blog cannot be a reference for tax planning or tax advice. Hence, we strongly advise you to consult a tax consultant or lawyer for all your tax matters.
