1. Introduction
On 27 February 2024, the UAE’s Federal Tax Authority (FTA) released Decision No. 3 of 2024, dated 22 February, detailing the registration deadlines for corporate tax under Federal Decree-Law No. 47 of 2022 (the “CT Registration Decision”). This decision will take effect starting 1 March 2024.
In this article, we provide an overview of the corporate tax registration deadlines and highlight some areas of uncertainty, particularly concerning non-resident (NR) persons and the impact of double tax treaties.
Corporate Tax Registration Deadlines
The CT Registration Decision specifies varying deadlines based on whether the taxable person is a legal or natural person, and whether they are a tax resident or non-resident.
Legal Persons
The CT Registration Decision differentiates between resident and non-resident (NR) legal persons for corporate tax purposes, as well as those entities established before or on/after 1 March 2024.
Resident Legal Persons
For legal persons established or incorporated in the UAE before 1 March 2024, the CT registration deadline depends on when their trade license was issued, as follows:
| Date of License Issuance | Deadline |
|---|---|
| 1 January – 28/29 February | 31 May 2024 |
| 1 March – 30 April | 30 June 2024 |
| 1 May – 31 May | 30 July 2024 |
| 1 June – 30 June | 31 August 2024 |
| 1 July – 31 July | 30 September 2024 |
| 1 August – 30 September | 31 October 2024 |
| 1 October – 30 November | 30 November 2024 |
| 1 December – 31 December | 31 December 2024 |
| If no license by 1 March 2024 | 30 June 2024 |
For legal persons that are incorporated or otherwise established in the UAE on or after 1 March 2024, the CT registration deadline is as follows:
| Category of Legal Person | Deadline |
|---|---|
| UAE-incorporated or recognized (including Free Zone Persons) | 3 months from incorporation or establishment |
| Foreign-incorporated legal person managed and controlled in the UAE | 3 months from the end of the person’s financial year |
Non-Resident Legal Persons
The CT Registration Decision also outlines deadlines for non-resident (NR) legal persons, which vary depending on when the person or their permanent establishment (PE) was established:
| Category of NR Legal Person | Deadline |
|---|---|
| NR legal person with a PE in the UAE before 1 March 2024 | 9 months from when the PE was established |
| NR legal person with a PE in the UAE after 1 March 2024 | 6 months from when the PE is created |
| NR legal person with a nexus in the UAE before 1 March 2024 | By 30 June 2024 |
| NR legal person with a nexus in the UAE after 1 March 2024 | 3 months from the date of creating the nexus |
However, the CT Registration Decision does not provide a clear registration deadline for NR persons deriving income from a UAE source. According to the CT Law, NR persons are subject to corporate tax if they (i) have a PE in the UAE, (ii) have a nexus in the UAE, or (iii) derive UAE-sourced income. Ministry of Finance Decision No. 43 of 2023 exempts these NR persons from registration, though they might still be subject to withholding tax on their UAE-sourced income (currently at a zero rate). The taxability of NR persons without a local PE remains somewhat ambiguous in the Gulf region.
Natural Persons
Natural persons conducting business activities in the UAE whose turnover exceeds AED 1 million must register for corporate tax by the following deadlines:
| Category of Natural Person | Deadline |
|---|---|
| Resident natural persons | By 31 March of the subsequent Gregorian year |
| Non-resident natural persons | 3 months from the date they become subject to CT |
2. Consequences of Non-Compliance
Persons who fail to apply for CT registration within the specified deadlines may face a penalty of AED 10,000.
Areas of Uncertainty
While the CT Registration Decision is largely clear, some areas remain uncertain, especially concerning non-resident persons.
- Non-Resident Legal Persons with a PE Before 1 March 2024: It is unclear whether the 9-month deadline begins from when corporate tax first applied in June 2023 or from the start of the first tax period in January 2024. To avoid complications, it is advisable for PEs in this situation to register as soon as possible.
- Non-Resident Legal Persons with a PE After 1 March 2024: The start of the 6-month deadline for PEs created after 1 March 2024 will usually be clear in cases like a UAE branch. However, for other types of PEs, the timeline may not be as straightforward. The CT Law defines a PE under OECD guidelines, and certain activities (e.g., construction sites or supervisory roles) may create a PE after 6 months of activity. It remains unclear when the registration deadline begins in such cases.
- Interaction with Double Tax Treaties: Several double tax treaties signed by the UAE stipulate that a PE does not exist unless the UAE activities last for 9 or 12 months. This could create discrepancies in terms of registration deadlines, as PEs might be considered to have a 12-month tax period, similar to resident legal persons. It would be more practical if the registration deadline were extended to 12 months from the PE’s creation date.
- Non-Resident Natural Persons with a PE: The registration deadline for NR natural persons with a PE is similarly unclear, especially concerning when the registration clock starts.
In summary, while these areas of uncertainty will likely be clarified through practice over time, the cooperative interaction with the FTA will be crucial for resolving any ambiguities.
3. Our View
The CT Registration Decision is the official launch of corporate tax compliance in the UAE, giving taxable persons clarity on when to register. While the majority of entities will have a clear deadline, there are still some uncertainties around non-resident persons, which will likely be addressed as the system matures.
4. How We Can Assist You
Our UAE tax team has deep expertise in the implementation of new tax regulations in the UAE. Having assisted numerous businesses with excise tax in 2017 and VAT in 2018, our team is well-versed in corporate tax law, double tax treaties, and administrative procedures.
Whether you are a legal or natural person, resident or non-resident in the UAE, we can help you comply with CT obligations, ensuring peace of mind as you focus on growing your business. Contact us for expert guidance.