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With this change, the UAE became the fourth among GCC (Gulf Cooperation Council) countries to introduce a federal corporate tax. How do these regulations affect UAE companies?
Regulatory requirements for RAK ICC companies
In light of the UAE’s loss of corporate tax exemption, the regime has a substantial impact on the entire country. Within this jurisdiction, RAK, or Ras Al Khaimah, is one of the seven emirates that make up the UAE, contributing to the overall economy and cultural diversity of the country.
As a result of the regime, RAK International Corporate Centre (RAK ICC) companies are required to meet specific requirements regarding corporate tax.
Corporate tax submission
Enterprises under the RAK ICC will have to pay corporate tax based on their worldwide income, instead of being exempt.
Specifically, taxable income up to AED 375,000 is taxed at 0%, and income above AED 375,000 is taxed at 9%. This rate is similar to other taxable entities in the region.
Tax Registration Number (TIN) registration
Like other applicable UAE businesses, RAK ICC companies are also required to register for a Tax Registration Number (TIN).
The company itself can complete this registration via the website of the Federal Tax Authority. Alternatively, a Registered Agent can handle the TIN registration process on the company’s behalf.
Annual tax return
Once registered, the RAK ICC business must file an annual tax return within 9 months from the end of each financial period.
Timely filing of the annual tax return is crucial to ensure compliance with the corporate tax requirements and to avoid any potential penalties.
Highlight of the current UAE corporate tax system
From June 1, 2023, taxable entities, including companies, corporations, and other relevant businesses, are required to adhere to the new corporate tax rate as follows:
| Taxable profit (net) amount | Tax rate |
|---|---|
| Up to AED 375,000 | 0% |
| Above AED 375,000 | 9% |
All businesses (including free zone companies) with their first financial year on or after June 1, 2023, must file for corporate tax registration in the UAE in the form and within the timeline set out by the authority, except in cases where the Minister prescribed otherwise.
Furthermore, any juridical person incorporating, establishing, or recognizing itself in the UAE on or after 1 March 2024 must submit a tax registration within three months of the date of incorporation, establishment, or recognition.
How do UAE businesses register for corporate tax?
UAE businesses eligible for corporate tax, including RAK ICC companies, shall register through EmaraTax, an online platform governed by the Federal Tax Authority.
To get started, each enterprise should establish an account by registering with an email address and phone number; or log in using the current credentials. Once logged in, the applicant can proceed to provide the necessary information and submit the required documents.
Following the submission, the FTA will review the application. After that, upon approval, the applicant will receive an email notification within 20 business days.
Should additional information be needed, the applicant shall provide the updated information and resubmit the application within 60 calendar days from the notification. After the resubmission, the FTA will take another 20 business days to respond.
Once your registration is approved, the next step is to fulfill your tax obligations per the UAE’s regulations. These encompass:
- Preparing and maintaining financial statements (Note: For taxable persons deriving revenues exceeding AED 50,000,000 during the relevant tax period, the financial statements must be audited)
- Adhering to filing and payment deadlines
- Maintaining financial records promptly
- Preparing for potential audits undertaken by the Authority to determine whether the person has fulfilled his obligations
- And so forth.
What are the filing and payment deadlines for UAE businesses?
Taxable entities must submit a corporate tax return and proceed with payment for each tax period within 9 months following the end of the relevant period.
For further information, please refer to the complete Federal Decree-Law on the Taxation of Corporations and Businesses.
To sum up, it is imperative for all eligible entities in the UAE to register for corporate tax as stated in the Federal Decree-Law. Following these instructions, businesses shall proceed to file their returns and make timely tax payments to avert the risk of incurring penalties.
How BBCIncorp can support your UAE business
We offer precise solutions to address your compliance needs in the UAE. By leveraging an intensive network of local experts and streamlined procedures, our support team provides reliable corporate services to facilitate corporate tax registration and ensure your smooth adherence to legal regulations.
Don’t hesitate to visit BBCIncorp website and reach out to us now for any inquiries about doing business offshore. We’re ready to help!
Disclaimer: While BBCIncorp strives to make the information on this website as timely and accurate as possible, the information itself is for reference purposes only. You should not substitute the information provided in this article for competent legal advice. Feel free to contact BBCIncorp’s customer services for advice on your specific cases.
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