Mainland Corporate Tax Registration in UAE

The UAE had to introduce corporate tax in its efforts toward global standards and norms of international taxation, as well as enhancing the fiscal system within it. Corporate tax is charged on business income so that an entity contributes to its economy while being subjected to a regulatory mechanism of international money flow norms. A corporate tax regime that is being exercised in the UAE is competitive because it charges tax rates fairly attractive to investments while being transparent and compliance-oriented.

Corporate tax registration, therefore, is important for any mainland company in the UAE to maintain legal compliance. This way, they not only comply with the nation's regulations but also do business transparently and credibly. Companies thus avoid legal penalties, demonstrate financial responsibility, as well as access international tax treaties and benefits.

Understanding Mainland Corporate Tax in UAE

The mainland companies operating in the UAE are registered by DED in each emirate, which allows the company to operate both within the country and globally without restrictions that limit the businesses of free zones or offshore companies. These companies are an important component of the United Arab Emirates economy as they can undertake any type of business inside the UAE as well as outside the country. From this perspective, mainland companies are subjected to federal laws of the country wherein they have their base of operation and thus totally conform to national financial standards on corporate tax regulations.

The tax rate in the UAE was designed to be competitive with supporting small businesses. Under this regime, taxable income up to AED 375,000 is taxed at a nil rate to encourage start-ups and small enterprises. Taxable income over AED 375,000 shall attract a tax rate of 9%. Multinational corporations that earn revenues across the globe to an amount greater than €750 million may pay tax at other rates based on a new structure that the OECD is outlining, Pillar Two, to ensure the fair tax treatment of global enterprise.

These include LLCs, public and private joint-stock companies, and branches of foreign companies that conduct business and generate income in the UAE. The sole establishments or civil companies would also be included if their income is above the taxable threshold. The company tax on partnerships would depend on their kind. Nevertheless, sectors like extractive industries or government institutions are exempted; however, they still undergo the registration process to declare themselves exempted.

Who Needs to Register?

In the UAE, corporate tax registration is important to all the mainland businesses in qualifying companies. A mainland business has to file with the Federal Tax Authority (FTA) if it performs any form of commercial, industrial, or professional activity and receives taxable income. This includes a wide scope of companies, such as Limited Liability Companies, public and private joint stock companies, as well as foreign branches. Even small entities like sole establishments and civil companies may have to register if their income exceeds the taxable threshold of AED 375,000.

Eligibility for the Companies of Mainland

The Mainland companies whose taxable income is above AED 375,000 are required to get registered for corporate tax. The companies need to meet their obligations before the UAE's corporate tax act by making a registration. The requirements are as follows:

• Company Type: LLCs, joint stock companies, and branches of other foreign companies.
• Annual Revenue: Any kind of business whose taxable income exceeds AED 375,000 is liable to get registered.
• Business Activity: Industrial, commercial, or professional concerns; registration for corporate tax

Exemptions (if any)

Mainly, most companies in the mainland require corporate tax. Nevertheless, there are a few organizations that are exempted from this form of taxation. For example:

• Companies Engaged in Extractive Industries: Companies engaged in extraction businesses, such as oil and gas, are exempt if they are subject to only Emirate-level taxation.
• Government-Owned Entities: The government-owned entities that undertake sovereign activities may also not pay corporate tax
• Companies operating from free zones: Free zone companies may be subjected to corporate tax where such companies undertake business within the mainland. Nevertheless, if they only carry out business activities within the free zone and other requirements are fulfilled, they can be exempt.

Even as there are exemptions, qualifying entities must register with the FTA and submit documents for exemption status

Eligibility Criteria for Mainland Corporate Tax Registration

Corporate tax registration in the UAE is mandatory for mainland companies subject to certain legal and financial criteria. Identifying the limits of who needs to be registered and what the threshold for which a company would have to pay taxes is critically important for compliance.

Entities Legally Required to Register

The mainland companies that exist in the UAE and carry on business will be liable for corporate tax. In general, the following types of legal entities have to register:

• Limited Liability Companies: LLC is the most popular form of corporate or business structure existing in the United Arab Emirates. For such kinds of LLCs, which have crossed the taxable income threshold, registration would be necessary.
• Public and private joint stock companies: These are bigger corporations, mostly publicly traded or wholly-owned companies, which also require registration.
• Foreign companies' branches: All the branches of foreign legal entities operating in UAE would need to register for corporate tax unless its only source of income is taxable in UAE.
• Sole Establishments and Civil Companies: Small businesses or professionals offering services that have taxable income must register.
• Partnerships: Depending upon the type of partnership and business activities carried out, some partnerships must be registered.

Turnover Thresholds and Tax Liability

Corporate tax in the UAE is going to be charged on annual turnover:

• 0% of Tax Rate: Is applicable to taxable income as high as AED 375,000, and this is aimed at targeting small businesses and startups.
• 9% of Tax Rate: This applies on taxable income exceeding AED 375,000. If crossed, companies have to pay the normal corporate tax on the amount exceeding the threshold.

Firms earning more than AED 375,000 tax revenue annually have to register for corporate tax, and any income beyond AED 375,000 will attract a 9% corporate tax levy.

 Exemptions and Exclusions (if any)

Most of the mainland companies are required to register, but there are some exemptions from corporate tax. The most critical kinds of exemptions are:

• Governmental Bodies and Sovereign Organizations: Entities that are fully owned and controlled by the government, or entities performing sovereign functions are exempt from Federal Corporate Tax.
• Extractive Businesses: Oil and gas extraction businesses from other natural resources come under Emirate-level tax and not federal corporate tax.
• Public Benevolent Organizations: Certain not-for-profits that contribute to the general public welfare come under specific exemptions.

In this case, despite the exceptions, affected entities are still compelled to subject themselves to the registration process, declaring their exemption status. This means that there is full transparency with the FTA.

 Step-by-Step Process for Mainland Corporate Tax Registration in UAE

To register for corporate tax with the FTA, mainland businesses must therefore follow clearly defined procedures offered within the UAE's corporate tax law. Hereunder is a step-by-step process for mainland corporate tax registration.

1. Pre-Registration Requirements

A business is expected to have obtained the following before starting with the registration process:

• Trade License: The business is expected to ensure that its mainland company has a valid trade license issued by the Department of Economic Development (DED).
• Financial Books: Make available recent financial records such as income statements, expenditures, and profit. Where possible, ensure audited financial statements of previous years.
• Business Information: The legal form of the entity (LLC, one establishment, etc.), ownership details, and the business activities of the company should be available upon request.
• TIN or VAT Registration applicable: When your business is VAT registered then make sure it has a TIN or VAT number.

2. Online Registration on the FTA Website

The FTA website of the UAE makes it easy to have a registration for corporation tax as follows:

Step 1: Accessing the FTA Website

Log in to the Federal Tax Authority website and create an account on the site, in case one already does not own an account.

Step 2: Log in to your FTA Account

Log into the FTA account then go to the registration section of the FTA website, on this portal that deals with corporate tax.

Step 3: Provide Your Business Details

Provide the following details:

• Trade license number and issuing authority
• Legal entity type example LLC, joint stock company,
• Business address and contact information
• Financial year start and end dates

Step 4: Provide Financial Information

Provide your company's annual revenue and taxable income.

Step 5: Upload Supporting Documents

Upload supporting documents such as a copy of the trade license, Memorandum of Association, and audited financial statements when required.

3. Documents required for registration

Businesses must provide the following documents when registering for corporate tax:

• Valid Trade License: Al-Qudra copy of the mainland trade license issued by the DED
• Memorandum of Association (MOA): The legal document that states the objective and the organizational structure of the company
• Audited Financial Statements: In this case, provide audited financial statements or recent financial statements
• Shareholders Information: Details and the nature of ownership of the shareholders of the Company
• Tax Identification Number(TIN): If the Company is already VAT-registered, Provide a TIN.

4. Timelines and Important Deadline

• Registration Deadline for Corporate Tax: Companies on the Mainland have to register before the deadlines set by the FTA as per the nature of operations.
• Tax Return Filing Deadline: A company is incorporated and hence ought to file its corporate tax returns every year within 9 months after the close of its fiscal year
• Payment Date: Corporate tax obligations should be paid within the same 9-month period after the close of the fiscal year

Important Dates:

• Registration Deadline: It should be registered well before the end date of the tax year followed by the respective company.
• Filing and Payment Deadline: Filing and corporate tax payments will be made 9 months after the end of a financial year.

Benefits of Mainland Corporate Tax Registration

• Legal Protection and Adherence to UAE Laws: Corporate Tax registration is in accordance with UAE Laws that will save the business from facing any type of legal liability.
• Access to Tax Treaties and Benefits: Registered companies can benefit from tax treaties the UAE has with other countries, potentially reducing their tax liabilities.
• Enhanced Business Credibility:  Corporate tax registration gives credibility to the company, and due to this, more trust is developed between clients, partners, or investors.

Corporate Tax Calculation for Companies Registered in Mainland Regions of UAE

1. Total Revenue

Calculate the total income earned by various business activities carried out within the UAE borders. These may include income from sales, services, and other streams as well. For accurate reporting, ensure there are no deficits or surpluses while reporting. Therefore, make sure to keep them zero as disparities may attract penalties.

2. Deductible Expenses

List all the expense heads that qualify as deductions. The heads include operating expenses, wages, rent, utilities, etc. Such deductible expenses should strictly relate to business activities and comply with UAE tax requirements.

3. Calculating Taxable Income

Deduct all allowable, deductible expenses from total revenue. That amount is the taxable income that applies for purposes of taxation in UAE corporate taxes.

4. Corporate tax rates

Applying the corporate rate of tax stated in the UAE tax regulations to the taxable income. Note that the rate will not be flat and there may be certain thresholds which are subjected according to the kind of business and revenues.

5. Tax Exemptions and Deductions

Familiarize yourself with exemptions specific to certain sectors of the economy and the deductions allowable by the UAE government, as a way of facilitating economic growth and investment in certain industries.

6. Return Filing and Payment

Due Dates Acquaint yourself with UAE corporate tax return filing and payment due dates to ensure timely return fillings. Filling or Payment after the due dates will incur penalties, and compliance costs will be increased.

7. Avoid Penalty of Non-Compliance

Non-compliance will cost a good size penalty. Ensure all your activities in taxes are properly aligned and conforming with UAE tax legislation, which should include proper reporting and accounting, documentation, and proper submission on time.

Corporate Tax Deadlines and Compliance for UAE Mainland

1. Timeline to Register as Function of the License Date of Issue

• All registered businesses in the United Arab Emirates mainland have to file to register for corporate tax. The tax registration deadline for business is tied to the date of issue of the trade license.
• Generally, newly licensed businesses have a specified period for filing for tax registration. The tax office can penalize a business if it files for tax registration after the specified registration period. 

2. Filing deadlines for tax returns and payment schedules

• Preparation of Tax Return: The organizations must submit their annual tax return for every fiscal year within the stipulated timeframe.
• Payment Due Dates: Companies generally have to pay corporate tax before a stipulated time from the submission of the tax return. An internal compliance calendar would serve to enable an organization to make certain projections for these dates and thus avert payment interest.

3. Specific Provisions for Newly Setup Organisations

• New ventures can be eligible for the deferment payment schedule or some sort of relief for the initial period with the support extended by UAE tax policies about new economic activities.
• The registration and paying taxes will be different for the new enterprises if particular sectors are under focus like technology, manufacturing, or R and D to pursue UAE's economic development goals.

Key Challenges and Considerations for Mainland Corporate Tax Compliance

1. Common Problem Areas of Business

• Documentation and Record-keeping: Maintained documentations and record-keeping accuracy is the most serious problem from record keeping issues. Those include invoices, contracts, payroll records, and receipts. It is required for a company to maintain all these items for tax return and audit purposes.
• Computation Complexity: This is one of the examples where tax computation is complex, especially with diversified various revenues or international transactions. Therefore, wrong computations may lead to non-compliance or overpayment.
• No Consistency in Reporting: Lack of consistency in reporting will make taxpayers fail to submit compliant tax records. Companies are therefore expected to consolidate their statements with the tax requirements of the UAE.
• Delayed Filing and Payment: Many businesses fail to monitor deadlines, which results in submitting taxes late accompanied by penalties and interest charges.

2. Importance of keeping up with changes in the tax policies and laws of UAE.

• Tax Laws Evolution: The tax system in the United Arab Emirates is evolving. The tax regime in UAE is constantly changing, with an updated version on the country's tax law and policies. Business enterprises should be abreast with the new corporate tax rates, exemptions, and filing procedures to stay and not violate their new tax laws.
• Industry-Specific Reforms: Some reforms and deduction/ exemption might go to specific industries which are aligned with the overall economic strategy. Periodic update of special laws related to specific industries helps the organization to avoid unintentional mistakes.
• International Harmonization of Tax: International tax reformations such as BEPS (Base Erosion and Profit Shifting) may attract UAE companies to learn about international laws, and such changes directly affect their return.

3. Role of Tax Consultants and Accountants in Compliance and Optimization of Tax Liability

• Expert Help: Tax consultants and accountants are that significant role which aids any business to successfully navigate the UAE tax laws with proper and timely filing and compliance objectives of local law.
• Optimization of Tax Liability: With proper planning and structuring, tax advisors can make a business optimize its tax liability within the legitimate bounds. The following are examples of maximizing eligible depletion, use of available exemptions and managing tax risks.
• Audit Readiness: An accountant can assist in preparation for tax audits, such as arranging the records in proper and comprehensive details so as to minimize risks associated with failing or improper filings

Need help with registration? Check out A quick guide to corporate tax on mainland and free zones

Why Choose Us for Mainland Corporate Tax Registration

Choosing our services for mainland corporate tax registration offers you a seamless and efficient experience. Reyson Badger provides expert guidance through every step of the registration process, ensuring compliance with UAE laws and regulations. Our knowledgeable team stays updated on the latest tax regulations, helping you maximize benefits from tax treaties and enhance your business credibility. With our support, you can focus on growing your business while we handle the complexities of corporate tax registration. Partner with us for a smooth, reliable, and professional registration process that aligns with your business goals.