The UAE Federal Taxation Authority has announced the implementation of the corporate tax system from June 1, 2023. While this is not the first time the UAE government has changed the tax landscape, the announcement has caused some confusion among the business community.
From now on, the UAE will impose a federal corporate tax on business profits. Tax rates range from 0% to 15%, depending on the company’s taxable net income. This will certainly generate additional revenue for the country’s economy. Corporate tax rules and regulations are developed with companies of all sizes in mind.
Pre-registration for corporate tax in the UAE
Under the FTA, companies with a fiscal year from January 2023 must register for corporate tax UAE now. In addition, this FTA will invite companies via email and SMS so that they can register for UAE corporate tax through the EmaraTax platform.
Selected companies that have received the FTA invitation can do early registration from January 2023 to May 2023. In addition, tax agents in Dubai can assist companies in declaring through pre-registration for corporate tax.
Registering for the UAE corporate tax?
After the pre-registration phase, the FTA will announce a date on which all companies and other companies can register for corporate tax in the UAE. Once the FTA announces the registration date, priority will be given to businesses that start their fiscal year on June 1, 2023. The FTA said it would allow enough time for companies and companies to apply for registration. However, registration and compliance with its laws are obligations.
It will be applied to companies that fall within the corporate tax in the UAE, including free zone companies. Companies must register even if their taxable income is more petite than the threshold of AED 375,000 annually. Exempt companies must also register for the UAE corporate tax to enjoy the exemption benefits. Corporate tax advisors in Dubai can assist you with the registration process.
Register for VAT to register for UAE corporate tax.
The corporate tax registration process in the UAE is distinct and independent from the VAT registration processes. Therefore, companies that are registered for VAT also have to register for UAE corporate tax if they fall within the tax criteria.
How to register for the UAE corporate tax
Relevant companies must register UAE corporate tax through the EmaraTax platform. The registration process can be speeded up through corporate tax advisors in Dubai. You can register for corporate tax by following these steps:
- Log in to your EmaraTax account using your login credentials or UAE Pass. If you do not have an EmaraTax account, you can register for one by clicking on the “Register” button.
- Upon successful login, the Taxable Persons List screen is displayed. Show the taxpayer list associated with your EmaraTax user profile. If no taxable person is associated with your user profile, this list will be empty, and you will need to create a taxable person.
- Click “Register” in the Corporate Tax box within the Taxable Person Dashboard to initiate a corporate tax registration application.
- A screen with instructions and instructions will appear. Please read the CT registration guidelines and guidelines and check the checkbox to confirm
- Click “Start” to start the CT registration request.
- Select your company’s entity type from the list in the Entity Details section. Please note that the entry fields in this section may vary depending on the entity type selected.
- After completing all the required fields, click Next Step to save and proceed to the Identification Details section.
- Depending on the selected Entity Type, you must provide the main business license details in the identification details section.
- Click “Add Business Activities” to enter all business activity information associated with the trade license. Then, enter the required business information and click Add.
- Click “Add Owners” to enter all owners who own 25% or more in the registrar. Then, enter the required owner information and click Add.
- Select Yes, if you have more than one branch, and add your local branch details. Then, for each branch, enter the details of the trade license, associated commercial activities, and the owner’s list.
- After completing all the required fields, click Next Step to save and proceed to the Contact Details section.
- Enter the company’s registered address details.
- After completing all the required fields, click Next Step to save and proceed to the Authorized Signer section.
- Click “Add authorized signatory” to submit the details about the authorized signatory.
- After entering the required information for the authorized signatory, click “Add.”
- After completing all required fields, click Next to save and proceed to the Review and Confirmation section.
- After carefully reviewing all information entered in the application, please check the box to declare the accuracy of the information provided in the application.
- Click Submit to submit your corporate tax registration application.
Prepare for corporate tax in the UAE.
From 2023, the UAE will impose a federal corporate tax on business profits. Tax rates range from 0% to 15%, depending on the company’s taxable net income. This will certainly generate additional revenue for the country’s economy. Corporate tax rules and regulations are developed with companies of all sizes in mind.
So, while this new tax regime is a step into the future for the UAE, how do businesses plan to deal with the change? To address this, these institutions have launched Corporation Tax training courses in Dubai to help professionals understand the latest tax changes.
Keep this in mind as you prepare for the next tax regime.
Accept the change
The first and most important step in preparing for the new corporate tax regime is to accept and embrace the change. The best way to prepare for change is to thoroughly understand the tax jurisdictions and the situation’s true nature. This can start by looking at the potential impact of corporate tax on your business and how you can improve your team’s skills to deal with this change.
Right communication channels
The second step is to ensure proper communication at all levels of the organizational hierarchy. While formal notice has yet to be issued, enough conclusions can be drawn about how the new tax system will work through the announcement and accompanying Q&A. Communicating this information throughout the organization helps prepare for change.
Assessing tax implications
It is an instinct to apply tax rates to net income to measure tax impact. However, taking a bottom-up approach to assessing your impact is critical. From transactions to entire business units, a clear assessment can help companies determine their tax logic and prepare for tax returns. Assessment results can be used to focus on areas of financial impact and manage the focus of successful implementation.
Recognizing Ways to Perform Change
The next step is to define the method for implementing the new changes. Adopting a new tax system can be easy with increased awareness and education. This step should start in the conference room and can be done by other employees. This step is critical because the ripple effects of this new tax regime will be felt throughout the organization.
Check compliance
Compliance and governance are the final two steps in managing the new tax structure. The quality of data and documentation must comply with regulations. It is considered an ideal or best practice for an organization’s data collection and protection. This step will help remove potential obstacles to full compliance when implementing federal tax laws.
Register with the best corporate tax advisor in Dubai.
Companies invited to pre-register must register for UAE corporate tax following FTA guidelines. Other companies can prepare for registration with a corporate tax expert in Dubai. Corporate tax advisory services in Dubai include CT assessments, advisory services, CT compliance services, and CT representation services to represent the UAE Federal Tax Authority (FTA) upon receipt of FTA notifications. Ensure corporate tax compliance and avoid associated penalties by using corporate tax services in Dubai, UAE.
Conclusion
There is still a long way to go before the first computerized statements are submitted, but time is running out, and much work remains. Nevertheless, it’s always early enough to start thinking about how your company will adapt to change. While some decisions will have to wait until the law is fully published and absorbed, a high level of work can be done in all areas mentioned above.