Federal Tax Authority Issues Public Clarification on Registration Timelines for Taxable Persons for Corporate Tax

Abu Dhabi, UAE - 11 June 2024 – Abu Dhabi, UAE — [Date] — The Federal Tax Authority (FTA) has issued a Public Clarification on the Registration Timelines for Taxable Persons for Corporate Tax, to further explain and clarify the specific deadlines for the different categories of Taxable Persons subject to Corporate Tax, and to encourage them to submit their Tax Registration application to the FTA.

The Public Clarification underscores FTA’s commitment in informing Taxable Persons and stakeholders about all key updates and developments, to ensure complete transparency and compliance. The Public Clarification is meant to clarify the timelines prescribed in Federal Tax Authority Decision No. 3 of 2024 on the Timelines specified for Registration of Taxable Persons for Corporate Tax for the purposes of Federal Decree Law No. 47 of 2022 on the Taxation of Corporations and Businesses and its amendments.

In a press release today, the FTA stated that this Public Clarification neither amends nor seeks to amend any provision of the aforementioned legislation. Therefore, it is effective as of the date of implementation, i.e. 1 March 2024, unless stated otherwise. The Public Clarification emphasises the deadlines for various types of Taxable Persons, both Resident Persons and Non-Resident Persons, including juridical persons and natural persons. It also addresses the registration requirements for juridical persons seeking exempt status from the FTA under the Corporate Tax Law. However, the timeline for applying for exemptions remains unchanged, as per FTA Decision No. 7 of 2023.

According to the Public Clarification, all Taxable Persons are required to submit a Tax Registration application to the FTA by the specified deadlines. Non-compliance will result in an administrative penalty of AED 10,000.

The Public Clarification includes a comprehensive analysis and examples to help Taxable Persons understand how the timelines apply to their specific category.

The FTA encourages all affected Persons to adhere to the specified timelines to ensure compliance and avoid any penalties. Therefore, it is crucial for all Taxable Persons to review the Public Clarification and ensure timely submission of their Corporate Tax Registration applications.

Key highlights from the Public Clarification

Juridical persons that are Resident Persons incorporated or otherwise established or recognised prior to 1 March 2024 must submit their Tax Registration application for Corporate Tax based on the month of their Licence issuance. If such a juridical person does not hold a Licence as of 1 March 2024, the application deadline is 31 May 2024. If the Taxable Person holds an expired Licence at 1 March 2024, the reference for submission is still based on the month of its original Licence issuance. For those with multiple Licences, the deadline is determined by the earliest issuance date, considering the year of issuance of the Licence. For juridical persons that are incorporated or otherwise established or recognised on or after 1 March 2024, they must submit a Tax Registration application within three months from the date of incorporation, establishment, or recognition. Juridical persons recognised under foreign legislation but managed and controlled in the UAE must submit a Tax Registration application within three months from the end of their Financial Year.

Juridical persons that are Non-Resident Persons prior to 1 March 2024, by virtue of having a Permanent Establishment in the UAE, must submit a Tax Registration application within nine months from the date of existence of the Permanent Establishment. The date of existence of the Permanent Establishment is when the Permanent Establishment is recognised for UAE Corporate Tax purposes. Therefore, for a fixed place of Business Permanent Establishment, the existence of the Permanent Establishment will be when all the requirements are met, including establishing a degree of permanence of six months in the UAE, starting from when the Corporate Tax Law came into force on 1 June 2023. If an international agreement provides a longer duration for recognising a Permanent Establishment, the international agreement prevails. Juridical persons that are Non-Resident Person by virtue of having a nexus in the UAE prior to 1 March 2024 must submit their application by 31 May 2024.

Juridical persons that are Non-Resident Persons on or after 1 March 2024 by virtue of having a Permanent Establishment in the UAE must submit a Tax Registration application within six months from the date of existence of the Permanent Establishment. If an international agreement provides a longer duration for recognising a Permanent Establishment, the international agreement prevails. Juridical persons that are Non-Resident Persons with a nexus in the UAE after on or after 1 March 2024 must submit a Tax Registration application within three months from the date of establishing a nexus in the UAE.

If the Non-Resident Persons has both a Permanent Establishment and a nexus in the UAE, the deadline to submit a Tax Registration application for Corporate Tax to the FTA is the earliest of their respective deadlines.

Starting from 1 January 2024, natural persons that are Resident Persons must submit a Tax Registration application for Corporate Tax if their Turnover from Businesses or Business Activities in the UAE exceeds AED 1 million within a Gregorian calendar year. If this threshold is met, a Tax Registration application must be submitted by 31 March of the subsequent Gregorian calendar year. Natural persons that are Non-Resident Persons must submit a Tax Registration application for Corporate Tax if their Turnover from Businesses or Business Activities derived via a Permanent Establishment in the UAE exceeds AED 1 million during a Gregorian calendar year, starting from 1 January 2024. Such natural persons are required to complete a Tax Registration application within three months of meeting the requirements of being subject to Corporate Tax. A natural person who is a Non-Resident Person will meet the requirements to be subject to Corporate Tax when they have a Permanent Establishment in the UAE and, in the Gregorian calendar year, they exceed the AED 1 million Turnover threshold derived from the Permanent Establishment.

The first possible Tax Period for a natural person, regardless if they are a Resident Person or a Non-Resident Persons, will be the 2024 Gregorian calendar year. Any income generated before 1 January 2024 will not be subject to Corporate Tax, and the deadline to submit a Tax Registration application is 31 March 2025.

The Public Clarification on Corporate Tax Registration Timelines underlines the FTA's dedication to foster a transparent and efficient tax environment, ensuring that all Persons can operate within a well-defined and supportive framework. This Public Clarification, other information on the Corporate Tax Registration timelines, and other related publications are available on FTA's official website.