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Guide to Corporate Tax Registration for Non-Resident Juridical and Natural Persons in the UAE

For corporate tax purposes, the distinction between juridical persons and natural persons individuals is essential for determining who is eligible to be considered a non-resident person. Non-resident juridical persons are those who have either a Permanent Establishment or a Nexus in the UAE. A permanent establishment is a location of business that is fixed, but a nexus is a substantial relationship or presence in the United Arab Emirates.

Juridical Persons and Corporate Tax Registration

Non-resident juridical persons are required to register for Corporate Tax when they meet one of the two criteria: 

  • having a Permanent Establishment 
  • or a nexus in the UAE. 

To avoid administrative penalties, timely registration of corporate tax is essential. Non-resident juridical persons should timely register with the Federal Tax Authority (FTA) to ensure compliance upon determining that their activities meet these requirements.

Exceptions for Juridical Persons

If a certain non-resident juridical person solely receives income from the state and has no permanent establishment or connection to the United Arab Emirates, they may not be required to register for corporate tax. It’s important to remember that this exception might not apply in all situations and is only applicable in particular ones. As a result, companies should carefully examine all of their revenue streams and, if necessary, seek advice from tax experts. 

Read more: Relation of Non-Resident Person for Taxation in Corporate Tax Law, UAE

Natural Persons and Corporate Tax Registration

If a natural person’s yearly turnover from a “business” or “business activity” in the United Arab Emirates exceeds AED 1 million, they are liable to UAE Corporate Tax. Except for income from jobs, personal assets, and real estate holdings, this includes income from enterprises categorized as Businesses or Business Activities. Understanding corporate taxes globally is crucial, as revenue earned outside the UAE may still be taxable if related to commercial activities in the UAE. 

Penalties for Non-Compliance

Non-compliance with the corporate tax law incurs severe consequences upon businesses, including administrative penalties and legal issues. Nonresident individuals operating in the United Arab Emirates may face negative financial health and credibility. Therefore, non-resident individuals must ensure compliance with corporate tax regulations.

Benefits of Timely Registration

Registration of corporate tax in advance offers numerous benefits, including adherence to the law, protection from fines and legal issues, and ease of operation in the United Arab Emirates, allowing businesses to focus on their primary operations.

Moreover, prompt registration in the UAE market demonstrates a commitment to compliance and ethical business practices, enhancing a company’s standing and establishing trust with partners and stakeholders.

Read more: How to Register for Corporate Tax in UAE?

Table on Tax Rates for Registered Persons:

CategoryTax RateConditions
Resident Juridical PersonsAs per specific sector ratesEngaged in business activities in the UAE
Non-Resident Juridical PersonsAs per specific sector ratesHaving a Permanent Establishment or Nexus in the UAE
Natural Persons (Business Income)As per thresholdYearly turnover from business activities in the UAE exceeds AED 1 million

How to Register for Corporate Tax

The Federal Tax Authority (FTA) provides a Tax Registration Number for non-resident individuals to complete their corporate tax registration. This unique identification number serves as a crucial step in the registration process, requiring them to adhere to the FTA’s guidelines. The FTA offers comprehensive instructions, resources, online portals, and support services, ensuring a seamless and effective registration process.

FAQs:

  1. What qualifies as a Permanent Establishment in the UAE for corporate tax purposes?
    • A Permanent Establishment refers to a fixed place of business through which the business of an enterprise is wholly or partly carried on in the UAE. This includes offices, branches, factories, and workshops.
  2. How does a Nexus differ from a Permanent Establishment in the UAE?
    • A Nexus is considered a significant economic presence or substantial relationship in the UAE that triggers tax obligations, even without a fixed physical location like a Permanent Establishment.
  3. Are there exemptions from corporate tax registration for non-resident juridical persons in the UAE?
    • Yes, non-resident juridical persons solely receiving income from the state without a Permanent Establishment or Nexus in the UAE may be exempt from corporate tax registration, subject to specific conditions.
  4. What are the penalties for non-compliance with corporate tax registration in the UAE?
    • Non-compliance can lead to severe administrative penalties, legal issues, and negatively affect a business’s financial health and credibility in the UAE market.

Avail the Services of Top Tax Consultants in the UAE

To ensure compliance with the corporate tax law, corporate tax registration is crucial for non-resident individuals conducting business in the United Arab Emirates. This article provides an overview of the requirements, exemptions, penalties, and advantages of timely registration. Adhering to these requirements ensures legal compliance, safeguards commercial interests, and supports the UAE’s economy’s growth. To successfully navigate corporate tax registration, it is advised to seek expert consultation from top tax consultants in Dubai. Thus, contact us today and we shall be glad to assist you. 

Mostafa is a qualified Corporate Tax Consultant with over 5 years of experience gained in diverse intricate tax matters, he has high expertise in conducting tax negotiations and investigations with the Federal Tax Authority and other external Tax Bodies. He has vast experience in reviewing and drafting tax documents. Mostafa has also advised on a plethora of tax matters, he draws much attention to tax filing procedures and to offering professional investigations to underlining tax complexities. Read more