The Federal Tax Authority (FTA) has issued new corporate tax registration deadlines that are much earlier than previously anticipated for enterprises. In most cases, the deadlines have been extended by more than a year.
The new staggered deadlines throughout 2024 require the first group of firms to be registered by May 31, with all companies having to be registered by the end of December 2024, in place of the prior deadline of September 2025 (for December tax year-end corporations).
Classification of companies
With this new framework, regardless of the year of license issuance, the FTA has categorized firms based on the month in which their original license was issued.
The FTA has published a timetable indicating the registration deadline that corresponds to the month of license issuing in order to provide a clear picture of the new time periods.
As an illustration, a company whose initial license was granted in May 2018 now has a July 31, 2024, registration date.
The deadline for a business that received its license in May 2023 is July 31, 2024.
The deadline for registering a business that received its license in October 2019 is November 30, 2024.
The illustration highlights the fact that the year of issue is unimportant and that just the month of license issuing is considered.
What implications do businesses face from the updated registration deadlines?
Although the date of registration is affected by this notification, the requirements for registration remain unchanged, encompassing all entities headquartered in the United Arab Emirates. Companies that fail to register by the deadline will be subject to a heavy fine of Dhs 10,000.
Moreover, the FTA stated that there will be no grace periods and that penalties will be applied right away if the deadline is missed.
Understanding the rationale behind the tax changes: John Casey, managing director of TaxReady, a Virtugroup company that offers specialized tax and accounting services to SMEs, entrepreneurs, and micro businesses, stated that "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."
The FTA will be able to more equitably distribute the workload by spreading out the deadlines throughout 2024. This will allow them to focus on processing tax filings beginning on January 1, 2025, which is when most corporations must submit their yearly filings.
By taking this preventive measure, administrative bottlenecks that can develop from filing taxes and registering at the same time are avoided.
Take prompt action
Casey counsels firms to act right away and make sure they are in compliance with the revised tax deadlines. Casey has helped thousands of companies register for corporate tax and get their accounting systems up to FTA standards.
Waiting till the last minute to register has no advantages. It's advisable to start now since you will eventually need to complete it. He emphasizes, "Delaying it only raises your risk of incurring the fine." According to the corporate tax rules of the United Arab Emirates, all businesses that are formed or that operate within the nation are required to register for corporate tax, maintain accurate accounting records, and file an annual tax return at the conclusion of their fiscal year.
Even if a firm is registered in a free zone, does not make any money, or is eligible for an exemption, these criteria still apply. Therefore, a business must still go through the compliance procedures to demonstrate its non-taxable status even if it is exempt from corporation tax.
