Federal Tax Authority urges registrants to take advantage of grace period

Gulf Today, Staff Reporter

The Federal Tax Authority (FTA) has called on registrants who have yet to update their tax records to take advantage of the UAE Cabinet’s decision to grant a grace period, relieving them from administrative penalties. The government’s decision has been attributed to the leadership’s desire to help reduce the tax burden on the business sector, encourage persons and companies to fulfil their tax obligations, and, in doing so, further enhance the UAE’s competitiveness for business.

The FTA stated that the Cabinet decision allows registrants to update information held in their tax records during the period from Jan. 1, 2024 to March 31, 2025, without incurring the administrative penalties for failure to inform the FTA of any instance that may require amendments or updates to their tax records.

Where the registrants have been imposed an administrative penalty during the period from 1 January 2024 until the implementation date of the grace period, the imposed penalty will be reversed. The FTA indicated that there is no requirement to contact them as the reversal will be done automatically.

According to the Cabinet Decision No. 74 of 2023 on the Executive Regulations of the Federal Decree-Law No. 28 of 2022 on Tax Procedures, the registrant shall notify the FTA in the form and mechanism approved by it within twenty (20) business days of any change to its data kept with the FTA. This includes details such as the name and address of the business, email address, trade licence activities, legal entity type, partnership agreements for unincorporated partnerships and articles of association or its equivalent, nature of business, and any address from which the business is conducted by the registrant.

As part of its ongoing efforts, the FTA encouraged those seeking further clarification to read the public clarification issued on the grace period to update information in tax records, which can be accessed through the Public Clarifications service on the FTA’s official website at https://tax.gov.ae/en/. This service aims to keep taxpayers informed about all technical matters related to taxes and taxpayer obligations, offering detailed explanations to simplify these concepts and enable taxpayers to easily comply with tax legislation.

The Federal Tax Authority was established by Federal Decree-Law No. (13) of 2016 to help diversify the national economy and increase non-oil revenues in the UAE through the management and collection of federal taxes based on international best practices and standards, as well as to provide all means of support to enable taxpayers to comply with the tax laws and procedures. Since its inception in 2017, the FTA has been committed to cooperate with the competent authorities to establish a comprehensive and balanced system to make the UAE one of the first countries in the world to implement a fully electronic tax system that encourages voluntary compliance, with simple procedures based on the highest standards of transparency and accuracy – beginning from registration, to the submission of tax returns, to the payment of due taxes through the Authority’s website: www.tax.gov.ae.

Meanwhile, the UAE’s Federal Tax Authority (FTA) reminds all natural persons who are subject to Corporate Tax to submit their Tax Registration applications for Corporate Tax no later than 31 March 2025, to avoid Administrative Penalties.

The FTA previously issued a guide on the Registration of Natural Persons (CTGRNP1) to raise awareness about the registration of natural persons for Corporate Tax. The FTA indicated that a ‘natural person’ means a living human being of any age, whether resident in the UAE or elsewhere. A natural person would only be subject to Corporate Tax insofar as he/she conducts a Business or Business Activity in the UAE. This includes sole establishments and individual partners in Unincorporated Partnerships that conduct a Business or Business Activity in the UAE. The guide explains that the first potential Tax Period for a natural person conducting a Business or Business Activity is the 2024 Gregorian calendar year.

The FTA announced in a press release today, that if a natural person is conducting a Business or Business Activity in the UAE during the calendar year 2024, or subsequent years, and their total Turnover in that calendar year exceeded Dhs 1 million, they are a Taxable Person, who must register for Corporate Tax no later than 31 March of the calendar year following the year in which their total Turnover exceeded the Dhs 1 million threshold, and comply with all their Corporate Tax obligations.

For example, if a natural person conducts a Business or Business Activity in the UAE during the 2024 calendar year, and their Revenue exceeded Dhs 1 million by 31 July 2024, they are required to submit an application to register for Corporate Tax no later than the 31 March 2025, and, consequently, submit a Corporate Tax Return no later than 30 September 2025.

If a natural person who must register for Corporate Tax does not submit a Tax Registration application by the applicable deadline, they will be subject to an Administrative Penalty of Dhs 10,000.

All relevant persons are encouraged to familiarise themselves with the Corporate Tax legislation, implementing decisions, guides, public clarifications and relevant awareness publications available on the FTA website.

Registration for Corporate Tax is available through the EmaraTax platform, which provides digital tax services around the clock, and where the Tax Registration procedure is explained in an easy and clear step-by-step manner. The FTA has also published the Corporate Tax Registration - Taxpayer User Manual, which includes a detailed explanation on how to register through EmaraTax.

As part of the FTA’s efforts to simplify and streamline tax processes for taxpayers, those who are registered for VAT or Excise Tax can access their accounts on EmaraTax to complete their Corporate Tax registration application, . Once approved, they will obtain a Tax Registration Number for Corporate Tax purposes.

New users can access the EmaraTax platform at https://eservices.tax.gov.ae/ and create an account by registering with an email ID and phone number. Once the user profile is created, the Taxable Person can select the Corporate Tax registration option and proceed with completing the Corporate Tax Registration application.