- Introduction
On 27 February 2024, the UAE’s Federal Tax Authority (“FTA”) published its Decision No. 3 of 2024, dated 22 February, regarding the timeline 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 (the “CT Registration Decision”). The CT Registration Decision came into effect on 1 March 2024.
In this article we provide an overview of the corporate tax (“CT”) registration deadlines, and we also highlight some points of uncertainty regarding non-resident (“NR”) persons and double tax treaties.
- The CT registration deadlines
The CT Registration Decision sets out different deadlines, depending on whether the taxable person is a legal or natural person, tax resident in the UAE or non-resident.
Legal persons
The CT Registration Decision distinguishes between resident and NR legal persons for CT purposes, and on whether such legal person existed before or on/from 1 March 2024.
Regarding resident legal persons which were resident, incorporated or otherwise established or recognised in the UAE before 1 March 2024, the deadline to submit a CT registration application depends on the date when such person was issued its trade license, as follows:
| Date of license issuance (irrespective of the year of 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 |
| Where a person does not have a license on 1 March 2024 | 30 June 2024 |
For those legal persons that are resident, incorporated or otherwise established or recognised in the UAE on or after 1 March 2024, the deadline to apply to register for CT is as follows:
| Category of legal person | Deadline |
| A legal person that is s incorporated or otherwise established or recognised under the applicable legislation in the UAE, including a Free Zone Person | 3 months from the date of incorporation, establishment or recognition |
| A legal person that is s incorporated or otherwise established or recognised under the applicable legislation of a foreign jurisdiction, and which is effectively managed and controlled in the UAE | 3 months from the end of the person’s financial year |
Regarding NR legal persons, again the CT Registration Decision distinguishes between those NR legal persons existing before or on/after 1 March 2024, as follows:
| Category of NR legal person | Deadline | |
| Existing before 1 March 2024 | Existing on/after 1 March 2024 | |
| A NR legal person that has a permanent establishment (“PE”) in the UAE | 9 months from the date of existence of the PE | 6 months from the date of existence of the PE |
| A NR legal person that has a nexus in the UAE | By 30 June 2024 | 3 months from the date of creating the nexus |
The reader may note that the CT Registration Decision does not address the CT registration deadline for NR persons deriving UAE sourced income. The CT Law provides that a NR person is subject to CT and therefore becomes a taxable person either if (i) it has a PE in the UAE; (ii) it has a nexus in the UAE; or (iii) if it derives income from a UAE source as defined in the CT Law. In theory, it could be argued that NR persons who derive UAE sourced income should also be required to register for CT. However, Ministry of Finance’s Decision No. 43 of 2023 exempts them from the obligation to register for CT. Our reading is that in the Finance Minister’s rationale, this group of NR persons is likely to be subject to CT by way of withholding tax in respect of most of the income they derive – although currently the rate of withholding tax is zero. For context, in practice the direct taxability of NR legal persons who do not have a local PE and derive locally sourced income which is not effectively subject to withholding tax remains a relatively untested area in the Gulf region.
Natural persons
Natural persons who conduct a business/business activity in the UAE and whose turnover exceeds AED 1 million are required to submit a CT registration application by the following deadlines:
| Category of nautral person | Deadline |
| Resident natural persons | 31 March of the subsequent Gregorian calendar year |
| NR natural persons | 3 months from the date of meeting the requirements to be subject to CT |
- Consequences of non-compliance
Persons who are required to apply for CT registration and delay or fail to do so within the above deadlines may be subject to an AED 10,000 penalty.
- Few areas of uncertainty
The CT Registration Decision is clear and the majority of taxable persons should be able to understand when they are required to register for CT.
However, there is some uncertainty regarding the CT registration deadline for NR persons.
- NR legal persons with a PE existing before 1 March 2024. It is unclear when do the 9 months deadline start to count for existing PEs – from the date CT started to apply in general (1 June 2023) or from the first day of their first tax period (1 January 2024 for those PEs following a calendar year). In either case, PEs that find themselves in this situation have a relatively straightforward solution to avoid unintended consequences – they should register as soon as possible.
- NR legal persons with a PE created on or after 1 March 2024. In many instances it will be clear when do the 6 months deadline to register for CT start counting – e.g. in respect of a UAE branch, 6 months from the date it is established. In other types of PEs, however, the starting date will not be so apparent. A PE is a purely tax concept. Under the CT Law, which follows a OECD type definition of a PE, there are several circumstances in which a NR person may create a PE. Some types of PE even require an extended presence in the UAE – e.g. a building site, a construction project, or place of assembly or installation, or supervisory activities in connection therewith may create a PE, but only if such site, project or activities, whether separately or together with other sites, projects or activities, last more than 6 months. For instance, if a NR legal person creates a building site PE, when do the 6 months registration deadline start counting – on the day the activities exceed 6 months, or retroactively since the first day when the activities commenced because that is when the PE started?
In addition, the interaction of the CT Registration Decision with double tax treaties will also need to be considered, because several double tax treaties signed by the UAE provide that a PE does not exist if the UAE activities do not last 9 or even 12 months.
Given that PEs are expected to have a 12-month tax period in a similar way to UAE resident legal persons, it would be more helpful if the registration deadline was extended to 12 months since the PE started, or even replaced by a 1-3 months deadline starting from the end of the PE’s first tax period. From experience, oftentimes companies do not plan on creating a PE and, instead, it is a situation they find themselves in due to their business growing rapidly.
- NR natural persons with a PE. Although we expect this group of persons to be limited in practice, the same considerations made above apply in this case – it is not entirely clear from which date the registration deadline should start running.
In summary, we expect that the above points will be clarified over time, through practice. Needless to say, this is where the cooperative interaction with the FTA will be key.
- Our view
The CT Registration Decision is the starting gun for CT compliance in the UAE. Taxable persons now know when they are required to register and they can start submitting their applications.
The CT Registration Decision is clear. However, there are some areas of uncertainty regarding NR persons, which we expect to be clarified over time, through practice.
- How we can help
Our UAE tax team has extensive experience with the introduction of new taxes in the UAE. They helped several businesses to successfully implement excise tax in 2017 and VAT in 2018. In addition, they are experts on double tax treaties, the CT law and related legislation, the administrative procedures and the FTA’s practices.
Whether you are a legal or natural person, resident or non-resident in the UAE, we can help you comply with CT obligations and bring peace of mind, so that you can focus on growing your business.