UAE Clarifies Corporate Tax Registration and Application for Exemption

The Federal Tax Authority (FTA) issued Decision No. 7 of 2023 on Provisions of Exemption from Corporate Tax for the Purposes of Federal Decree-Law No. 47 of 2022 on Corporations and Businesses Taxation (the UAE "CT Law").

Exempted entities shall apply for corporate tax registration by the issued date on the latest ministerial decision No 7 of 2023 and also apply for corporate tax exemption application within the stipulated time.

Explore the provisions of corporate tax exemption in the UAE and understand the eligibility criteria and implications for businesses. Decision No. 7 of 2023, which was released by the Federal Tax Authority (FTA), will significantly affect companies doing business in the United Arab Emirates.

This choice will impact many businesses in the UAE effective from June 1st, 2023. The FTA has urged companies to take the actions required to abide by the new rules and guarantee prompt registration. Penalties and fines could apply if you do not register.

List of Entities Exempted from UAE CT

In accordance with the new decision, exempt individuals include persons involved in

a. Government and government-owned entities
b. A government-controlled entity
c. Extractive business
d. Non-extractive natural resource business
e. A Qualifying public benefit entity
f. Qualifying investment fund
g. A public pension or social security fund
h. Other juridical persons in UAE wholly owned and controlled by an exempt person mentioned on the above a, b, f, and g
i. Those that will be determined by the Cabinet at the suggestion of the Minister (to be confirmed)

Corporate Tax Registration Timeline for Exempted Entities

Individuals who fall under (e) Qualifying Public Benefit Entity categories must apply for tax registration to secure a tax identification number by 1st October 2023, while others must do so by 1st June 2024. The FTA has also clarified that some exempt person categories must submit an annual declaration to attest to their continued eligibility for exemption.

Corporate Tax Exempt Application

The Entities (f), (g), (h) and (i) referred to above, may be entitled to submit an application for exemption from Corporate Tax where the relevant exemption conditions from corporate tax law are met. These Entities shall apply for exemption within 60 business days from the end of the Tax Period.

Once the Application for exemption has been approved, the exemption shall be effective from the start of the Tax Period specified
in the application. 

Note: In case of any issues in the application, the Authority may determine an alternative date for the effective date of the exemption other than the date

The FTA has urged companies to seek advice from tax professionals and take the necessary steps to ensure compliance with the new rules. In order to avoid fines and penalties, it has also emphasized the significance of tax adherence and urged businesses to keep accurate records and submit their tax returns on time.

Many people have applauded the decision because it will guarantee a stronger tax framework for the nation, increasing accountability and transparency in company operations. However, some people are worried about the financial cost of compliance and how it will affect small businesses.

Organizations are advised to speak with tax professionals and take the steps required to guarantee compliance with the revised laws in light of the recent decision. The FTA has also declared that it will keep advising and helping businesses as they negotiate the new tax environment.

Do you want to qualify for the corporate tax exemption if you are a public benefit entity? Call BMS Auditing now! You can clarify your questions and gain a better understanding of corporate tax from our tax consultants in Dubai.