UAE corporate tax: Deadline alert

The Federal Tax Authority (FTA) recently announced new deadlines to register for corporate tax, significantly bringing forward the deadlines for businesses – in most cases more than a year earlier than originally indicated.

Instead of the previous deadline of September 2025 (for December tax year-end companies), the new staggered deadlines throughout 2024 require the first group of companies to be registered by May 31, with all companies to be registered by the end of December 2024.

With this new framework, the FTA has grouped businesses depending on the month in which their original licence was issued, regardless of the year of licence issuance.

To give a clear picture of the new time frames, the FTA has released a schedule showing the registration deadline corresponding to the month of licence issuance.

For example:

A business which was issued its original licence in May 2018 now has a registration deadline of July 31, 2024.

A business which was issued its licence in May 2023 also has a deadline of July 31, 2024.

A business which was issued its licence in October 2019 has a registration deadline of November 30, 2024.

The point being illustrated is that only the month of licence issuance is taken into account – the year of issue is irrelevant.

What do the revised registration deadlines mean for businesses?

Whilst this announcement impacts the timing of registration, there is no change to the criteria of who needs to register, which includes all UAE-based companies. Businesses that miss their deadline will face a hefty fine of Dhs10,000 for late registration.

Furthermore, the FTA indicated that there will be no grace periods, and fines will be incurred immediately upon missing the deadline.

Decoding the reasons behind the tax changes:

“The decision to bring forward the registration deadlines looks to be a well-considered move by the FTA to prevent a last-minute surge of registrations in late 2025, which could overwhelm the system,” said John Casey, managing director of TaxReady, a Virtugroup company that provides SMEs, entrepreneurs and micro businesses with specialised tax and accounting services.

By staggering the deadlines throughout 2024, the FTA will be able to distribute the workload more evenly, ensuring that they can concentrate on processing tax filings starting January 1, 2025, which is when the majority of companies need to submit their annual filings.

This proactive approach will help prevent administrative bottlenecks that could occur if registration and tax filing were to coincide.

Act on time:

Having assisted thousands of companies in registering for corporate tax and getting their accounting systems up to FTA requirements, Casey advises businesses to immediately take action and ensure their compliance with the updated tax deadlines.

“There is no benefit in waiting right up to your deadline to register. You will need to do it at some point, so best to get onto it now. Delaying it only increases your risk of
incurring the fine,” he emphasises. The UAE’s corporate tax laws stipulates that every business incorporated or operating in the country must register for corporate tax, keep proper accounting records and submit an annual tax filing at the end of their financial year.

These requirements apply even if a business qualifies for an exemption, does not generate any revenue, or is registered within a free zone. So even if a business doesn’t need to pay corporate tax, it will still need to go through the compliance steps to prove its non-taxable position.