In the United Arab Emirates (UAE), a federal corporate tax was introduced on June 1, 2023. This move aims to diversify the economy and boost business transparency. The standard tax rate is set at 9% on taxable profits exceeding 375,000 UAE dirhams (about $102,000). If your income falls below this threshold, you’re off the hook for tax obligations.
Who has to register for tax in the UAE?
The new tax regime in the UAE covers a wide range of legal entities and individuals, whether they operate on the mainland or in free zones. Most organizations and entrepreneurs must register, but there are certain exceptions and special cases to consider.
Obligations for local companies
Registration for corporate tax is mandatory for all legal entities operating in the UAE, regardless of where they conduct their business:
- Mainland companies;
- Free zone entities;
- Foreign organizations.
In addition, entrepreneurs who earn an annual income of over 1 million dirhams (around $280,000) are also required to register. This rule applies to freelancers and other individuals whose earnings exceed that limit.
Tax registration for offshore companies
Offshore companies conducting business operations in the Emirates or having permanent establishments there are subject to tax laws as well. These businesses must register if they earn income tied to the UAE.
For example, let’s say an offshore company registered in the British Virgin Islands signs a long-term contract with a client in the UAE for consulting services. To fulfill this contract, they open an office in Dubai, hire staff, and lease commercial space. Since the company has a permanent establishment in the Emirates and generates income related to the country, it must register with the Federal Tax Authority (FTA) for corporate tax purposes. This requirement stands even if the company is officially registered outside the UAE.
Exceptions and special cases
Despite the extensive coverage of the new tax regime, some organizations and types of income are exempt from corporate tax:
- Enterprises engaged in mining natural resources;
- Individuals receiving investment income;
- Charitable foundations and other public organizations meeting the criteria of Cabinet Decision No. 37;
- Intra-group transactions and reorganizations.
Tax registration is a necessary step for most businesses and entrepreneurs in the UAE, except in cases outlined by law. Timely compliance with this requirement helps minimize risks and supports successful business operations.
When do you have to register for tax purposes?
Legal entities, including companies in free zones that are registered or recognized in the UAE from March 1, 2024, onward must apply for tax registration within three months from their registration date or recognition date according to local law.
In addition, there are separate registration timelines for non-residents and entrepreneurs.
Non-resident companies
For foreign companies, the registration deadlines are as follows:
- A non-resident company must register within 9 months of establishing a permanent establishment in the Emirates.
- A company with ongoing connections in the Emirates must register within 3 months after making the relevant decision.
Individuals
For individuals, the registration timelines vary based on the situation:
- An entrepreneur doing business in the Emirates and earning over 1 million dirhams (~$280,000) must register by March 31 of the following year.
- A non-resident earning income from sources in the UAE must register within 3 months after exceeding the limit.
Steps in the process of tax registration in the UAE
Tax registration in the UAE involves several key steps, starting with obtaining a unique Tax Registration Number (TRN) and ending with paying corporate tax. Here’s a detailed breakdown of each step.
Applying for a Tax Registration Number (TRN)
The first step is to get a Tax Registration Number (TRN), which is unique to each business. You’ll need this number for any tax-related operations in the UAE.
To obtain the TRN, you should:
- Visit the official FTA website;
- Fill out the form, providing your company’s legal status, trade license number, and contact information.
Preparing documents
After receiving the TRN, collect all the necessary documents to complete the registration:
- Trade license — original and copy of the current license issued by the UAE authorities;
- Articles of Association — provide a copy of the document outlining the company’s responsibilities, shareholders, and share capital;
- Financial statements;
- Passport copies — for all shareholders, directors, and authorized persons;
- ID for company owners — copies of identification documents for all shareholders and authorized personnel.
Submitting the application for registration
Once you’ve collected all the required documents, you can submit your application via the EmaraTax portal. You can use UAE Pass for authentication. The process includes:
- Filling out the registration form with company details, changes, and any possible exceptions;
- Checking the provided information before submission.
Errors in documentation or information may cause delays in registration.
Review of the application by the FTA
After you submit your application, the FTA reviews the data and may request additional documents or clarifications. It’s a good idea to respond quickly to any tax authority requests to avoid delays in the process. The standard processing time is 20 working days. If your application is rejected, you have 60 days to correct any errors and resubmit the documentation.
Receiving the CTRN (Corporate Tax Registration Number)
Once your application is successfully processed, you’ll receive a unique 15-digit CTRN. This number confirms your company’s registration for corporate tax purposes.
Consequences of failing to register for tax purposes
Failing to meet registration deadlines can lead to a fine of 10,000 dirhams (around $3,000). Additionally, the Cabinet of Ministers has introduced several other penalties related to corporate tax through resolutions No. 75 of 2023 and No. 10 of 2024. Here are a few examples:
| Type of violation | Fine (in dirhams) | Equivalent in $ |
| Failure to submit mandatory corporate tax reports | 10,000 for each violation. 20,000 for repeated violations within 24 months. | ~3,000/ 6,000 |
| Failure to provide tax data, reports, and documents in the Arabic language upon request | 5,000 | ~$1,400 |
| Failure to file a tax return by the deadline | 1,500 dirhams for each month or part of the month in the first 12 months. 1,000 dirhams for each month or part of it starting from the 13th month. | ~410/ 410/ 280 |
| Error in the declaration | 500 | ~$140 |
How we can help with tax registration in the UAE
Tax registration in the UAE isn’t just a formality: it’s a crucial step towards running a successful and lawful business in the country. The process requires careful document preparation, adherence to deadlines, and full compliance with legal requirements.
Leave the process to the experts and rest assured that your business is meeting all tax norms. Reach out for a consultation, and we’ll make tax registration in the UAE as simple and transparent as possible! The cost of our service starts at $400.
