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UAE Corporate Tax Alert for Crypto and Web3 Entrepreneurs: Deadline and Key Details
All businesses and individuals conducting business in the UAE must register for corporate tax with the Federal Tax Authority (FTA) under Federal Law No. (47) 2022 (CT Law) through the EmaraTax portal.
Who Needs to Register?
Individuals: Natural persons engaged in business activities in the UAE must register. This includes those with sole establishments, freelance work permits, and partners in unincorporated partnerships.
Whether an individual is engaged in a business that is subject to CT will depend on whether the activity requires a commercial license or equivalent permit from the relevant UAE authority. A natural person shall be subject to UAE Corporate Tax in case they derive an annual turnover exceeding AED 1 million from a ‘Business’ or ‘Business Activity’.
Companies and Legal Entities: All UAE-incorporated companies, partnerships, and other legal entities must register. This includes all Freezone Companies, even if they are eligible for certain tax exemptions.
Branch Offices: UAE branches of domestic companies do not require separate registration; their parent companies must register. However, UAE branches of foreign companies must register independently as their income is considered taxable in the UAE.
Deadlines for Registration:
The specific deadline for corporate tax registration depends on the month your business license was issued. Please refer to the following timeline:
- January – February: May 31, 2024
- March – April: June 30, 2024
- May: July 31, 2024
- June: August 31, 2024
- July: September 30, 2024
- August – September: October 31, 2024
- October – November: November 30, 2024
- December: December 31, 2024
New entities incorporated after March 1, 2024, must register within three months from the date of their establishment.
Penalties:
Failure to register by the deadline incurs a fine of AED 10,000.
Do I Still Have to Register If Exemptions Apply?
Under CT Law, a company or an individual undertaking a business activity must register whether or not they may be eligible for certain tax exemptions.
What About Individuals?
As mentioned above, individuals need to register if they undertake a business or business activity. However, individuals will not be taxed and therefore do not need to register for corporate tax if the income is generated from the following:
Salaries and wages earned from a company, including income earned as compensation for duties carried out as an executive on a board.
Personal Investment Income: For example, where an individual uses personal savings to invest in a listed company and earns income from the investment, this is not deemed taxable income. In this context, the individual will not need to register.
Real Estate Income: Income earned from rental income or the sale of a property.
We strongly advise you to check your Trade License registration date as soon as possible. If it falls in January or February of any year, you need to register before May 31, 2024, to avoid any penalties or disruptions to your business operations.
If you have not yet obtained your Corporate Tax Number and need assistance with the registration process, please let us know. We would be happy to help you with this matter.