As the number of businesses launching in the UAE continues to rise, some newly established small and medium enterprises (SMEs) appear to be overlooking a crucial requirement: the need to initiate their tax registration promptly. According to the Federal Tax Authority, companies must complete their tax registration within three months of incorporation.

According to MSN, Sumayya Zain, CEO of Hallmark International Advisors, emphasized the importance of adhering to this rule. She noted, “For companies incorporated after March 1, 2024, the deadline for submitting a tax registration application is 3 months from the date of incorporation.” Failure to comply will result in a penalty of Dh10 000 for delayed registration.

This means that newly incorporated companies cannot afford to delay their tax registration. The priority for these businesses is to submit their application on time; any further inquiries from the FTA should be considered secondary. A tax consultant highlighted that many SMEs are unaware of their tax registration obligations, mistakenly believing they have more time than they actually do.

Zain supports this observation, stating that several new businesses have either not registered or are unaware of the strict deadlines imposed. She clarified, “The rule is pretty straight-forward: If a company is incorporated on June 16, 2024, the last date for registration will be September 16, 2024.”

It is vital for all business owners to understand that corporate tax registration is mandatory for all entities involved in business activities within the UAE. This requirement applies to mainland, free zone, and offshore companies, regardless of their operational status or profitability. Therefore, the tax registration deadlines remain applicable even if the companies have not yet reached the financial thresholds that would require them to pay a corporate tax rate of 9%.

For companies established in designated free zones, there may be eligibility for tax benefits, such as a 0% corporate tax rate. However, they are still required to register and file tax returns. Recently, Dubai introduced additional incentives for free zone companies to establish branch operations on the mainland, but compliance with UAE’s corporate tax guidelines remains essential.

Zain pointed out a common misconception among business owners regarding offshore companies. She stated, “Many business owners mistakenly believe that UAE-registered offshore companies conducting business activities outside the UAE do not need to register for corporate tax.” This is incorrect; offshore companies operating within the UAE must register for corporate tax and file tax returns, even if their activities are solely conducted outside the country.