General Questions About Taxes

What is Value-Added Tax (VAT)?
VAT is an indirect tax applied to most goods and services at every stage of the supply chain. In the UAE, it was introduced at a rate of 5% starting January 1, 2018.

What is Corporate Tax?
Corporate Tax is a direct tax levied on the net profits of businesses. In the UAE, it was introduced to support strategic goals and accelerate development and growth.

Who is required to register for taxes?
Companies and individuals whose taxable supplies exceed a certain threshold must register for VAT. For Corporate Tax, all businesses in the UAE are subject to the tax starting from their first financial year beginning on or after June 1, 2023.

What are the main benefits of tax registration?
Registration ensures compliance with laws, avoids penalties, and enhances a company’s credibility. Registered entities can also reclaim input tax on their purchases.

Are all businesses required to pay taxes?
Yes, most businesses are required to pay taxes, although certain exemptions apply, such as for some government entities and qualifying non-profit organizations.

What tax exemptions are available?
Exemptions include some financial services, residential properties, and undeveloped land. Certain government entities and qualifying non-profit organizations are also exempt from Corporate Tax.

What laws and regulations govern taxes in the UAE?
Taxes in the UAE are governed by several laws, including Federal Decree-Law No. (8) of 2017 on VAT and Federal Decree-Law No. (47) of 2022 on Corporate Tax.

What is the difference between Income Tax and Corporate Tax?
Income Tax is levied on individual income, while Corporate Tax is applied to business net profits. Currently, the UAE does not impose Income Tax on individuals, but Corporate Tax is applied to business profits.

Questions About Tax Registration

How can I register for VAT?
You can register through the Federal Tax Authority’s (FTA) website by creating an account and submitting the required information.

How can I register for Corporate Tax?
Registration is done via the “EmaraTax” platform of the FTA. It is recommended to visit the FTA’s official website for detailed guidance.

When does tax registration become mandatory?
Registration becomes mandatory when taxable supplies exceed the mandatory registration threshold. For VAT, this threshold is AED 375,000. For Corporate Tax, it applies to financial years starting on or after June 1, 2023.

What documents are required for registration?
Required documents include the trade license, partners’ passports, Articles of Association, and lease agreements. The specific requirements may vary depending on the nature of the business.

What are the steps for online tax registration?
Steps include creating an account on the FTA website, filling out the registration form, uploading the necessary documents, and submitting the application.

How long does it take to register a company for taxes?
Registration typically takes a few working days but may vary depending on the completeness of the documents and accuracy of the provided information.

Can someone register on behalf of another person or company?
Yes, a legal representative or certified tax agent can register on behalf of another person or company, provided the necessary authorization is submitted.

What are the penalties for late registration?
Penalties for late registration can reach up to AED 10,000. It is advised to check the FTA’s official website for precise details.

Can previously paid taxes be refunded after registration?
Yes, input tax on purchases can be reclaimed after registration, provided it is related to taxable supplies.

Can small businesses register for taxes?
Yes, small businesses can voluntarily register if their supplies or expenses exceed the voluntary registration threshold. For VAT, this threshold is AED 187,500.

Are there any fees associated with tax registration?
Typically, there are no fees for registering for VAT or Corporate Tax. However, additional services or consultations may incur fees.

Questions About Tax Returns

What is a tax return?
A tax return is an official document submitted to the FTA detailing the taxable supplies, revenues, and expenses subject to payable tax.

How do I prepare a tax return correctly?
Tax returns are prepared by consolidating all taxable supplies, the tax imposed, and the recoverable input tax, then submitting these details through the “EmaraTax” platform.

When should tax returns be submitted?
For VAT, returns are submitted quarterly or monthly based on the size of the business. For Corporate Tax, the annual return is submitted after the financial year ends.

What are the penalties for late submission of tax returns?
A penalty of AED 1,000 is imposed for the first late submission, and AED 2,000 for subsequent delays within 24 months.

What information should be included in the tax return?
The return should include details of taxable supplies, exempt supplies, tax charged, and recoverable input tax.

Can tax returns be corrected after submission?
Yes, corrections can be made by submitting a “Return Amendment Request” through the FTA platform.

How long should tax records be retained?
By law, records must be kept for at least five years, though this period may be extended depending on the type of business activity.

Questions About VAT

What is the VAT rate in the UAE?
The current VAT rate is 5%.

What categories are subject to VAT?
Most goods and services are subject to VAT, except for certain exemptions like financial services and residential properties.

How can VAT be reclaimed?
Input VAT on expenses related to taxable supplies can be reclaimed by filing accurate tax returns.

What purchases are subject to VAT?
Most goods and services are subject to VAT, except for exempt categories such as specific financial services and residential properties.

Do individuals have to pay VAT?
Yes, VAT is applied to goods and services consumed by individuals if they are taxable.

How are exported goods and services treated under VAT?
Exports are taxed at 0%, which means input VAT related to these supplies can be recovered.

Questions About Corporate Tax

What is the Corporate Tax rate in the UAE?
The base rate is 9% on net profits exceeding AED 375,000.

Are small businesses required to pay Corporate Tax?
Businesses with annual profits below AED 375,000 are exempt from Corporate Tax.

What categories are exempt from Corporate Tax?
Exempt entities include government entities, qualifying non-profit organizations, and certain investment funds.

How is Corporate Tax calculated?
It is calculated at 9% of the net profits earned after deducting qualifying expenses.

Does Corporate Tax apply to a company’s international income?
Only income connected to business activities in the UAE is subject to tax.

What expenses can be deducted from Corporate Tax?
Deductible expenses include costs directly related to business activities, such as rents, salaries, and operational costs.

Additional Questions About Tax Registration

Can a new company register for taxes immediately after incorporation?
Yes, new companies can register if their expected taxable supplies exceed the mandatory registration threshold.

What is the benefit of hiring a tax consultant during registration?
A tax consultant ensures full compliance, avoids errors, and provides the necessary guidance to simplify the process.