It is the duty of the natural or juridical person to ascertain their tax obligations under the self-assessment system that governs the UAE Corporate Tax regime. A person who is subject to corporate taxation must register and carry out all associated duties such as filing returns and making any required payments.
Taxable person -The following are examples of taxable persons. For example, a natural person is an individual. A juridical person which is a business or other legal entity. Unless they are eligible as Non-Resident Persons with only State Sourced Income and no Permanent Establishment (PE) in the United Arab Emirates the majority of people especially those who run businesses are required to register for corporate tax.
A natural person is a person regardless of age who may live in the United Arab Emirates or somewhere else. A natural person is liable for corporate taxation if they are conducting business or business-related activities in the United Arab Emirates. This includes individual business owners who operate as sole proprietors and Partners in unincorporated partnerships that conduct business in the United Arab Emirates. Regardless of nationality or physical presence, a person conducting business in the United Arab Emirates is considered a resident for corporate tax.
A person who lives outside of the United Arab Emirates but may still be subject to UAE taxes who possesses a fixed location in the United Arab Emirates. A person may be considered a non-resident person for corporate tax purposes if they are from a nation that has a Double Taxation Agreement (DTA) with the United Arab Emirates if their PE and activities adhere to the DTA.
Corporate Tax Registration Requirements- If they fulfil the following requirements a natural person is required to register for corporate tax.
- The individuals are either residents or non-residents (having a permanent establishment in the United Arab Emirates).
- They carry out all business operations in the United Arab Emirates.
- The annual turnover is more than AED 1 million.
Note: Wage income personal investment income and real estate investment income are typically not included in the corporate tax base.
What is a business or business activity?
Regular independent operations in the commercial, industrial, agricultural, professional, and service sectors are all part of a business. The short-term activities that involve several connected transactions are also covered.
Participating in prizes or winnings in game shows or lotteries is typically not regarded as a business. Income from business ventures carried out in the UAE and possibly from outside the UAE if connected to UAE-based operations is included in an individual’s taxable income.
The process of registering for corporate taxes
- The registration process
Apply online through the EmaraTax portal. Use your current login information if you are already registered for VAT or excise tax. Create a new login if you aren’t already registered.
- The procedure for tax registration
The FTA requires the submission of a registration application along with supporting documentation. On review of the application, the FTA will either approve or reject the application. A Tax Registration Number will be issued following approval.
- Processing Timeline for Registration
Within 20 business days of receiving a completed application, the FTA seeks to review and reply to the registration. The FTA will reply within 20 business days of receiving any additional information that is requested. If more information is not submitted within the allotted time the application will be rejected and must be resubmitted.
- Important Details and Documentation Needs
- Contact information including phone number physical address and email address.
- Passport: A copy of the photo page is required.
- The Emirates ID is required.
- If applicable a business license and information about the sole establishment are not required.
- If applicable registration information for VAT and excise tax is not required.
- Bank account information is not required.
Duties after registering for corporate taxes
A natural person is subject to a corporate tax once they have registered several important administrative duties. These consist of:
- Making a Tax Payment and Filing a Return. Within nine months after the conclusion of the applicable tax period the individual must file a corporate tax return and make any required tax payments.
- For the preservation of records for at least seven years after the conclusion of the Tax Period to which the records pertain, they must keep all records and documentation supporting their tax position.
- The person must make sure that all their registration information is correct and current. The Federal Tax Authority (FTA) must be informed of any modifications within 20 business days.