Understanding the UAE Corporate Tax law with a focus on the foreign source is a must. As the UAE Corporate Tax Registration deadline is starting from 31st May 2024, we shall walk you through the norms for Foreign Entities in this article. This blog is essential for anyone who is seeking insights on how foreign income is taxed under the UAE’s Corporate Tax Regulations. 

Know who is taxable under UAE Corporate Tax Norms for Foreign Entities?

According to the UAE corporate tax law, foreign juridical persons are considered UAE resident persons for tax purposes if they have a place of effective management (POEM) in the UAE. Such entities will be treated as resident taxable persons, making corporate tax registration mandatory. 

Entities that have a fixed or permanent place in UAE through which a non-resident person wholly or partly conducts business, including branches, offices, factories or building sites will be considered as Permanent Establishment or PE in the UAE. 

If a non-resident judicial person earns income from immovable property in the UAE, they would be treated as having a “Nexus” in the UAE. 

So, entities with PE and Nexus in the UAE will be treated as non-resident taxable persons and corporate tax registration will be mandatory for such foreign entities. Based on this, the FTA (Federal Tax Authority) Decision No. 3 of 2024, came into effect on March 1, 2024, marking a significant shift in the UAE tax regulation. 

The Final Deadline for UAE Corporate Tax Registration for Foreign Entities

For foreign companies having a place of effective management (POEM) in UAE, the deadline for tax registration varies depending on its date of establishment/incorporation. 

Here are the insights into the final deadline for UAE Corporate Tax Registration for foreign entities which are as follows:

• Entities incorporated or established before March 1, 2024, must submit their tax registration application by May 31, 2024. 
• Entities incorporated and established after March 1, 2024, must file their applications within 3 months from the end of the financial year.  
• Non-residents with Permanent Establishments established before March 1, 2024, have nine months from the establishment date to submit their applications. 
• Entities establishing Permanent Establishments after March 1, 2024, have six months from the establishment date of their permanent establishment.
• Entities establishing Nexus before March 1, 2024, have three months March 1, 2024, 
• Entities establishing Nexus after March 1, 2024, have three months from the establishment of Nexus to apply for registration. 
• A non-resident natural person who runs a business or carries out business activity during the Gregorian calendar year 2024 or subsequent years and whose total turnovers generated exceed the limit specified in the relevant tax legislation should register within 3 months from the date of fulfilling the conditions set out to determine taxable person.

Corporate tax registration has begun

The registration for foreign entities has already begun allowing them to submit applications. Once submitted, the Federal Tax Authority (FTA) will review the information and documents with an estimated turnaround time of 20 days before approving the application. 

Penalty for delay in Corporate tax registration

The entities must adhere to the deadlines, as the UAE government is enforcing strict compliance measures that must be followed by all. Entities or taxable person who fail to submit their corporate tax registration applications are subject to penalties of Dh 10, 000 by the cabinet decision No. 75 of 2023. 

Conclusion

The implementation of these deadlines by the UAE helps in enhancing the tax regulatory financial structures for a better ethical business environment. The UAE government aims to boost the continued growth and development of UAE business.

At Auditac International, we have an expert team in place with rich experience in assisting businesses with their corporate tax needs. We aim to simplify the entire process of Corporate Tax Registration with the right solutions. Get connected to one of our experts at Auditac International to know more about Corporate Tax Registration for foreign entities. 

Disclaimer