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The United Arab Emirates has seen major tax reforms in the last few years, shaping the business landscape. Corporate tax, introduced this year, becomes one of the most critical milestones as it lays an explicit necessity for businesses to register and comply with the Federal Tax Authority. Companies engaged in all kinds of activities operating in Sharjah need to secure tax registration as it has been a good legality aspect while also keeping away from penalties. Therefore, this guide shall outline the corporate tax in the UAE, stressing the significance of registration and its regulation by FTA in Sharjah.
The corporate tax regime is designed to encourage economic growth with greater transparency and compliance with international tax standards. In this respect, Sharjah is one of the central emirates in transition. In a nutshell, business organizations under registration supervised by the FTA must also observe compliance with the regulations set. Failure to observe registration as well as compliance will attract fines, penalties, and reputational damage.
All businesses operating in the UAE, including those in free zones, must register for corporate tax. This requirement applies regardless of whether a business expects to exceed the registration threshold of AED 375,000 in annual turnover. Essentially, any commercial entity conducting economic activities with a profit motive is considered a taxable entity and must register.
The corporate tax is levied at a rate of 0% on profits up to AED 375,000 and 9% on profits exceeding this amount. Therefore, even if a business does not anticipate reaching this threshold, it is still mandated to complete the registration process to comply with UAE regulations.
To register for corporate tax, businesses must prepare several essential documents. These include:
1. Compliance with UAE Tax Laws: Registering for corporate tax ensures compliance with UAE tax laws and regulations.
2. Avoidance of Penalties and Fines: Timely registration and compliance avoid penalties and fines imposed by the Federal Tax Authority (FTA).
3. Access to Government Services: Registered businesses can access government services, including tenders, contracts, and licenses.
4. Enhanced Business Credibility: Corporate tax registration enhances business credibility and reputation, attracting investors and customers.
5. Simplified Financial Transactions: Registered businesses can conduct financial transactions smoothly, including opening bank accounts and obtaining loans.
6. Eligibility for Government Incentives: Registered businesses may be eligible for government incentives, such as tax exemptions and subsidies.
7. Improved Financial Management: Corporate tax registration promotes accurate financial reporting and management.
8. Reduced Risk of Business Disruption: Registration ensures business continuity, reducing the risk of disruption due to non-compliance.
To register for corporate tax on the Emara Tax Portal, follow these simple steps:
Step 1: Log In
Log in to the Emara Tax Portal using your credentials.
Step 2: Add Taxable Person
Add the taxable person/entity to the portal.
Step 3: Access Corporate Tax Dashboard
Open the Corporate Tax Dashboard.
Step 4: Initiate Registration
Click "Start" to begin the registration process.
Step 5: Entity Information
Fill in the Entity Section, providing the required details.
Step 6: Identification Details
Complete the Identification Section.
Step 7: Contact Information
Fill in the Contact-Details Section.
Step 8: Authorized Signatory
Provide Authorized Signatory details.
Step 9: Review and Declare
Review the application carefully, then declare its accuracy by ticking the checkbox.
Step 10: Submit Registration
Click "Submit" to complete the registration process.
After registration of corporate tax in Sharjah, all the enterprises have several tax obligations to be met to ensure compliance with the UAE tax law.
Tax Return Filing and Payment
Registered firms are expected to file their corporate income tax returns within nine months from the end of the firm's accounting year. For example, if a company closes its books on December 31, it will file the return by September 30 of the following year. In addition to returning, the businesses are required to pay the taxes payable along with the return. Failure to submit within this timeframe attracts drastic penalties and charges of interest.
Value Added Tax and Excise Tax Compliance
As a constituent of corporate tax, the company should monitor its compliance with value-added tax, or VAT, and excise tax. The businesses have to accurately compute and pay the pertinent VAT on all qualified transactions and see to it that there is proper documentation in claiming input tax cost recovery. Payment of these taxes should be consistent because any mistake would definitely raise an alarm for an audit and sometimes a penalty.
Tax Returns and Audits
It is the mandate of businesses to make truthful tax returns that will appropriately depict their taxable incomes. The FTA is legally bound to audit the companies to ascertain whether the companies are adhering to the tax laws in place. In such an eventuality, companies should have very informative records regarding all the financial activities since these records will be quite essential while being audited.
Sharjah being a government requires private businesses in the Emirate to have a direct concern for registration at the right time, documentation, and payment of tax dues as any other forms of weakness may result in penalties. The most prevalent issues such as delayed registration, under registration or errors in filings, and failure to pay tax may lead to significant financial and operational implications.
To avoid such complications, one should seek help from a professional. Reyson Badger is there to provide corporate tax advice and always keep you in compliance and efficient in your tax process.
Now to determine the reliability and expert advice in terms of tax, Reyson Badger is available for you to contact today so that your business can meet all corporate tax requirements in Sharjah.