Corporate tax is a tax on the profits of companies. There used to be no corporate tax in the UAE for most companies. But from June 1, 2023, the UAE government levied corporate tax at 9%. This was to assist the nation in its growth and align with international tax policies.
If your company makes more than AED 375,000 a year, you will be required to register and pay corporate tax. This applies to both mainland and free zone companies. You can take the help of corporate tax registration services in Dubai to make everything easy.
Who Needs to Register for Corporate Tax?
Most companies in the UAE must register for corporate tax. This includes:
- Mainland companies
- Free zone companies (with some exceptions)
- Foreign businesses with a branch in the UAE
- Freelancers and self-employed individuals (if income is above the limit)
If your business earns under AED 375,000, you still need to register. But you won’t have to pay tax until your income crosses that amount.
What Happens If You Don’t Register?
If you don’t register on time, you may face:
- Penalties from the Federal Tax Authority (FTA)
- Trouble renewing your trade license
- Delays in banking or investment processes
- Legal issues
To avoid these problems, it’s smart to complete your registration early. Many companies now hire experts who offer corporate tax registration services in Dubai to ensure everything is done right.
How to Register for Corporate Tax
The process is simple if you follow each step:
1. Create an FTA Account
You must register your business on the Federal Tax Authority portal.
2. Gather Documents
You’ll need trade license copies, the passport/Emirates ID of the owner, the MOA, and financial records.
3. Fill Out the Application
Enter all business details correctly. Mistakes can delay approval.
4. Submit and Wait
After submission, you’ll get a Tax Registration Number (TRN) once approved.
If this sounds confusing, don’t worry. You can get help from professionals offering corporate tax registration services in Dubai who handle all these tasks for you.
Free Zone Companies: Are They Taxed?
Free zone companies are treated differently. Some free zones offer a 0% tax rate if the business stays within its zone and follows specific rules.
However, if your free zone company works with mainland clients or earns income outside the free zone, it may be subject to taxation.
Tip: Always check with a tax consultant to know if your free zone company qualifies for the 0% rate.
Keeping Financial Records Is a Must
Under the new law, all companies must have proper records of income, expenditure, and profit. The records must be kept for at least 7 years.
Records include:
- Sales invoices
- Purchase receipts
- Salary payments
- Bank statements
- Audit reports (if any)
Without these, you may not be able to prove your tax details during audits. A tax consultant can help you set up a simple accounting system to keep everything in order.
When Do You Need to File and Pay?
Every year, you must file a corporate tax return. The deadline is 9 months after the end of your financial year. For example:
- If your financial year ends on Dec 31, your tax return is due by Sept 30 the following year.
- You must also pay the tax due by that date.
Late filing or payment can result in heavy fines. That’s why many companies work with corporate tax registration services in Dubai to stay on track.
Penalties You Should Avoid
Here are some mistakes that lead to penalties:
- Not registering on time
- Providing wrong information during registration
- Failing to file returns before the deadline
- Not paying taxes on time
- Poor or missing financial records
To avoid these issues, plan ahead. Keep good records, track your deadlines, and consult with professionals when needed.
Do Freelancers and Small Businesses Need to Worry?
Yes, if their income is more than AED 375,000 per year. Even if the tax rate is 0%, registration is still required. Many freelancers forget this step and end up with fines.
So whether you’re running a large company or working on your own, corporate tax rules apply.
Final Thoughts
Corporate tax in the UAE is now a part of doing business. Worry not if you understand the norms and follow the rules. Keep yourself informed, maintain records, and get registered in time.
If you need help, Accurate Accounting offers reliable corporate tax registration services in Dubai. Our experts simplify tax filing and ensure it’s error-free. Call us today to stay compliant and focus entirely on your business growth.
