Federal Decree-Law No. 47 of 2022 went into effect on December 9, 2022, making the new corporate tax regime for taxable businesses in the United Arab Emirates (UAE) mandatory. The administration recently advised RAK International Corporate Center (ICC) enterprises that they are likewise governed by this regime.
According to the law, starting on or after June 1, 2023, taxable firms and individuals will be subject to a 0% or 9% tax, depending on their income amount.
With this modification, the United Arab Emirates (UAE) became the fourth GCC (Gulf Cooperation Council) nation to enact a federal business tax. What impact do these rules have on businesses in the UAE?
Rules that apply to RAK ICC businesses
With the UAE no longer being free from corporate taxes, the regime significantly affects the whole nation. One of the seven emirates that comprise the United Arab Emirates, Ras Al Khaimah, or RAK, falls under this Authority and adds to the nation’s total economy and cultural variety.
As a result of the system, companies based in the RAK International Corporate Centre (RAK ICC) must comply with certain corporate tax regulations.
Submission of corporate taxes
Instead of being exempt, businesses subject to the RAK ICC will now be required to pay corporate tax depending on their international income.
To be more precise, income beyond AED 375,000 is subject to 9% tax, whereas taxable income below AED 375,000 is taxed at 0%. This rate is comparable to that of other taxable businesses in the area.
Registration of a Tax Registration Number (TIN)
It is mandatory for RAK ICC enterprises and other relevant UAE businesses to obtain a Tax Registration Number (TIN).
The Federal Tax Authority’s website allows the business to complete this registration. Alternatively, a registered agent might manage the company’s TIN registration.
Yearly tax return
After registering, the RAK ICC company has nine months to file its annual tax report from the end of each financial period.
The annual tax return must be filed in timeIn order to assure compliance with company tax regulations and to prevent potential penalties.
Highlights of the business tax system in the United Arab Emirates currently in place
Taxable entities, such as corporations, companies, and other pertinent businesses, must apply the new corporate tax rate as follows as of June 1, 2023:
The tax rate for taxable profit (net) amounts is 0% for amounts up to AED 375,000 and 9% for amounts over AED 375,000.
Unless the Minister specifies otherwise, all firms (including free zone enterprises) that begin their first fiscal year on or after June 1, 2023, must register for corporation tax in the United Arab Emirates using the form and within the timeframe provided by the Authority.
In addition, any juridical entity that incorporates, establishes, or recognizes itself in the United Arab Emirates on or after March 1, 2024, must file a tax registration within three months of that date.
How do companies in the UAE register for corporation tax?
Businesses in the UAE subject to corporate tax, such as RAK ICC corporations, must register via EmaraTax, an online portal run by the Federal Tax Authority.
Each business should create an account by registering with a phone number and email address, or they can use their current login information to get started. After logging in, the candidate can continue to fill out the needed fields and send in the required files.
The FTA will review the application after it is submitted. The candidate will receive an email notification within 20 business days of approval.
If more information is required, the applicant must supply it and submit the amended application within 60 calendar days of receiving notice. The FTA will reply after an additional 20 working days following the resubmission.
Following approval of your registration, you must comply with UAE legislation regarding your tax obligations. These include:
- Creating and keeping up with financial statements (Note: An audit of the financial statements is required for taxable individuals whose revenues exceed AED 50,000,000 in the applicable tax period)
- Observing the due dates for filing and payments
- Keeping up with financial documentation on time
- Getting ready for any audits that the Authority might conduct to check if the person has complied with his duties
- And so forth.
In summary, as per the Federal Decree-Law, all qualifying organizations operating in the United Arab Emirates must register for corporate tax. Businesses must proceed with filing their forms and making timely tax payments in accordance with these recommendations to avoid facing fines.
How GERAI LTD may help your business in the UAE
We provide exact solutions to meet your compliance obligations in the UAE. Our support team works with a vast network of local specialists and streamlines procedures to offer dependable corporate services that help with corporation tax registration and guarantee compliance with laws.
Please visit the GERAI LTD website and contact us immediately with any questions about conducting business abroad. We can assist you now!
Giorgi
https://gerai.co.ukMy mission is to provide client-focused legal solutions and services through flexible, value-driven approaches by leveraging technologies to anticipate the needs of those existing and potential clients I serve in a manner that adheres to the highest standards of excellence and integrity in the field of Business Law.