How to Register for Corporate Tax
Corporate Tax (CT) registration is a crucial step towards developing the tax infrastructure in the UAE, as it constitutes a type of direct tax imposed on the profits and income of companies and entities, aiming to enhance the UAE's status as a preferred business and investment destination. The new tax law focuses on achieving a balance between strengthening the state's financial structure and fostering business by imposing a competitive tax rate on corporate income based on internationally recognized accounting standards.
We at the International Consultancy & Auditing Center always strive to provide support and guidance to our clients regarding corporate tax, enabling them to comply with laws and regulations efficiently and fully prepared.
What is Taxable Income?
"Taxable income" refers to the net profit or loss realized by companies and entities during a certain period, calculated based on business accounting data. This income is adjusted according to the standards specified in the Corporate Tax Law, including specific factors such as capital consumption, investments, and administrative expenses. This final income, as determined, is subject to taxation, and the amount of tax due for the company is calculated based on it.
The Income Exempt from Corporate Tax
Income exempt from corporate tax in the UAE includes several categories:
- Stock or equity profits: This category includes dividend distributions received from entities established or resident in the country.
- Profits earned from share participations in foreign entities: Profits earned from share participations in foreign entities are exempt from corporate tax.
- Other types of income: This category includes income earned from capital, gains/losses from foreign currency exchange, and gains or losses from value depreciation, based on specific standards.
- Income from foreign branches or permanent establishments: Income earned from a foreign branch or permanent establishment that has been selected for exemption through a "permanent establishment exemption" request is exempt.
- Income earned by non-residents from operating or leasing aircraft or ships in international transportation when certain conditions are met.
These categories of income are exempt from corporate tax in the UAE, contributing to the enhancement of the investment and business climate in the country.
Persons Obliged to Register for Corporate Tax
Persons obliged to register for corporate tax are:
- Local companies: Including companies established or recognized under the legislation applicable in the United Arab Emirates.
- Foreign companies: Including companies established or recognized under the laws applicable in a foreign jurisdiction or another country, provided that their principal commercial and administrative decisions are made in the country to achieve effective management and control factors in the country.
- Natural persons: If they engage in any business or business activities in the country.
- Companies not resident in the country: If they own a permanent establishment or earn qualifying income in the country.
These individuals and companies are obliged to register for corporate tax in accordance with the tax laws applicable in the United Arab Emirates.
What is Meant by a Natural Person?
The term "natural person" is used in tax laws to refer to human individuals, i.e., individual persons. In the context of Corporate Tax Law, a natural person is considered to be an individual who owns or operates businesses or business activities individually without representing a company or legal entity.
What is Meant by a Legal Entity?
A legal entity is generally defined as any entity established or recognized under the laws and regulations applicable in a specific country, enjoying separate legal personality from its founders, owners, and managers. This term includes companies, institutions, trusts, and any other entity with separate legal personality under the applicable laws. These entities are capable of entering into contracts, transactions, investments, and other obligations independently of their owners.
In the context of the Corporate Tax Law in the United Arab Emirates, a legal entity includes limited liability companies, institutions, local trusts, public or private joint-stock companies, and any other entities with separate legal personalities under the applicable laws. These entities can conduct contracts, transactions, investments, and other obligations independently of their owners.
How to Register for Corporate Tax:
The Corporate Tax registration service provided by the Federal Tax Authority aims to enable legal entities and individuals in the United Arab Emirates to comply with corporate tax requirements. Through this service, individuals are registered for corporate tax and obtain the necessary Corporate Tax Registration Number (TRN) to fulfill their tax obligations.
Service Channels:
- UAE Tax Portal: Available 24/7 throughout the week.
- Federal Tax Authority Smart App.
Details of How to Register for Corporate Tax:
- Fees: Free.
- Expected time to complete the application: It is expected to take about 30 minutes.
- Expected time for the Authority to complete the application: Up to 20 working days from the date of receipt of the complete application.
- Required Documents: Required documents vary depending on the type of registrant (natural person or legal person).
- Procedures: An account must be created on the UAE Tax Portal, and the taxable person must be identified, then the option to register for corporate tax is selected, and registration is completed.
Terms and Conditions of Registering for Corporate Tax:
All persons subject to tax must register for corporate tax in accordance with the Corporate Tax Law in the United Arab Emirates.
The Federal Tax Authority may also require some exempt persons to register for corporate tax.
Branches in the United Arab Emirates for a local or foreign legal entity are an extension of the parent entity and are therefore not considered separate legal entities, so registration or submission of declarations is not done separately from the parent company.
At the International Consultancy & Auditing Center, we provide assistance in registering for corporate tax and guidance on all aspects of corporate tax. This includes the process of registering for corporate tax and complying with the requirements of the new law, where companies can receive assistance in determining the necessary procedures for registering for corporate tax and obtaining the required TRN.
We take pride in providing high-quality services and comprehensive guidance to our clients in the process of registering for corporate tax, ensuring their compliance with tax laws and smooth transition to the new tax system. Based on our experience and practical knowledge, we ensure that our clients receive full support and professional consultation in all aspects of corporate taxation.
