Overview of Public Clarification issued by Federal Tax Authority on 4 June 2024
Article 51 of the Federal Decree Law No. 47 of 2022 titled “Taxation of Corporations and Businesses” (UAE CT Law) mandates that a Taxable Person must compulsorily register under this law. The Federal Tax Authority (FTA) is empowered to prescribe the timeline for any taxable person to register for Corporate Tax. FTA issued Decision No. 3 of 2024, prescribing the requisite timelines, effective from 1 March 2024. On 4 June 2024, the FTA issued a ‘Corporate Tax Public Clarification’ titled “Registration Timelines for Taxable Persons for Corporate Tax,” detailing the timelines for submitting a tax registration application for corporate purposes. Different registration timelines are provided for different taxable persons, with illustrations to explain their application. All taxable persons must submit a tax registration application to the FTA no later than the timelines set by the FTA. Failure to do so within the specified timeline will incur an Administrative Penalty of AED 10,000. The timeline specified by FTA Decision No. 3 of 2024 differs depending on whether the Taxable Person is:
Resident Juridical Person (including Free Zone Persons and Offshore Companies recognized under applicable UAE legislation):
Incorporated or otherwise established or recognized prior to 1 March 2024: A juridical person incorporated, established, or recognized prior to 1 March 2024, must submit a Tax Registration application based on the month of their License issuance within the deadline provided in FTA Decision No. 3 of 2024, regardless of whether the license is valid or expired.
Example: Company C, incorporated in Abu Dhabi on 1 April 2020, had a license valid until 31 March 2022, which was neither renewed nor canceled. Company C is a Resident Person as it was incorporated in the UAE and must submit a Tax Registration application by reference to the month of its License issuance (i.e., April). Therefore, the Tax Registration application must be submitted by 30 June 2024.
Incorporated or otherwise established or recognized on or after 1 March 2024: A juridical person newly incorporated, established, or recognized in UAE on or after 1 March 2024, must submit a Tax Registration application within three months from the date of its incorporation, establishment, or recognition.
Example: Company E, incorporated in Sharjah on 16 June 2024, is a Resident Person, as it is incorporated in the UAE. Since the incorporation date is after 1 March 2024, Company E must submit a Tax Registration application by 16 September 2024 (i.e., within three months from the date of incorporation).
Juridical person effectively managed and controlled (POEM) in the UAE prior to 1 March 2024: A juridical person incorporated or otherwise recognized in a foreign jurisdiction but with POEM in the UAE will be treated as a Resident juridical person per UAE CT Law. If the juridical person does not hold a license on the effective date of FTA Decision No. 3 of 2024, the Tax Registration application must be submitted within three months from the effective date of FTA Decision No. 3 of 2024, i.e., by 31 May 2024.
Example: Company A, incorporated in the UK on 1 April 2019, has had POEM in the UAE since 1 April 2022. Company A is a Resident Person because it has POEM in the UAE as of 1 June 2023. As Company A is a Resident Person before 1 March 2024, it must submit a Tax Registration application by reference to its License issuance date. Since Company A does not hold a License, it must submit a Tax Registration application for CT within three months from the effective date of FTA Decision No. 3 of 2024, i.e., by 31 May 2024.
Juridical person with POEM in the UAE after 1 March 2024: A juridical person incorporated, established, or otherwise recognized under the legislation of a foreign jurisdiction but with POEM in the UAE on or after 1 March 2024 must submit a Tax Registration application within three months from the end of its Financial Year.
Example: Company F, incorporated in Germany on 1 April 2024, has its board meetings and strategic managerial decisions for 2024 and 2025 in the UAE. Company B is a Resident Person because it has POEM in the UAE for the year ending 31 March 2025. As Company B is a Resident Person after 1 March 2024, it must submit a Tax Registration application for CT within three months from the end of its Financial Year, i.e., by 30 June 2025.
Important Points:
Non-Resident Juridical Persons:
Non-Resident Person with a Permanent Establishment (PE) in the UAE prior to 1 March 2024: If a Juridical Person has a PE in the UAE, the deadline to submit a CT Registration application will be within 9 months from the date of existence of the PE (i.e., when the PE is recognized for UAE CT purposes). If an International agreement for the avoidance of Double Taxation (DTAA) has a longer duration for recognizing PE in the UAE, then the provision under the DTAA shall prevail.
Example: Company G, incorporated in the USA on 15 July 2008, established a branch in Dubai on 1 May 2023. The Company shall be subject to CT from 1 June 2023 (as the UAE CT Law provides that the tax period commencing on or after 1 June 2023 will be within the purview of UAE CT Law). Assuming all other requirements of PE are met, the six-month period in the UAE shall end on 1 December 2023. Therefore, the date of existence of the PE for Company G shall be 1 December 2023 (i.e., 6 months from 1 June 2023). The Company will have to file a CT Registration application within 9 months from the date of existence of PE (i.e., 1 December 2023). Thus, the due date for CT Registration shall be 1 September 2024 (9 months from 1 December 2023).
Non-Resident Person with PE in the UAE on or after 1 March 2024: If the Juridical Person has a PE in the UAE, the deadline to submit a CT Registration application shall be within 6 months from the date of existence of the PE (i.e., when the PE is recognized for UAE CT purposes). If a DTAA has a longer duration for recognizing PE in the UAE, then the provision under the DTAA shall prevail.
Example: Company K, incorporated in Luxembourg on 22 October 2019, established a branch in Abu Dhabi on 1 July 2024. Assuming all other requirements of PE are met, the six-month period in the UAE shall end on 1 January 2025. Therefore, the date of existence of the PE for Company K shall be 1 January 2025 (i.e., 6 months from 1 July 2024). The Company will have to file a CT Registration application within 6 months from the date of existence of PE (i.e., 1 January 2025). Thus, the due date for CT Registration shall be 1 July 2025.
Non-Resident Person with a nexus in the UAE prior to 1 March 2024: If the Non-Resident Juridical Person has a nexus in the UAE (i.e., deriving income from Immovable Property in UAE), then the due date to file a CT Registration application shall be within 3 months from the effective date of FTA Decision No. 3 of 2024.
Example: Company J, incorporated in Oman on 3 January 2024, purchased residential property in Dubai for investment purposes on 10 January 2024. The property was rented out on 15 February 2024. Company J does not have a Permanent Establishment in the UAE. Company J is a Non-Resident Person because it is not a Resident Person and has a nexus in the UAE. Although the Immovable Property was purchased on 10 January 2024, it did not earn income from the Immovable Property until 15 February 2024. Company J, therefore, had a nexus in the UAE on 15 February 2024. Company J is a Non-Resident Person with a nexus in the UAE on 15 February 2024 (i.e., before 1 March 2024) and should have submitted a Tax Registration application within three months from the effective date of FTA Decision No. 3 of 2024, i.e.,
