With the recent changes in tax laws and the promulgation of new laws, it is difficult for natural persons to deal with corporate tax laws while conducting business activities in the UAE. Natural persons conducting business activities with an annual turnover exceeding AED 1 million are mandated to register for corporate tax as per Cabinet Decision No. 49 of 2023.
According to the Federal Decree-Law No. 47 of 2022, individuals with annual taxable income (net profit) exceeding AED 375,000 must register for corporate tax. This threshold ensures that taxation is applied only to significant business income, aligning the UAE’s tax system with international standards.
This article covers the basic definitions and eligibility criteria of a natural person in corporate tax law, the process of corporate tax registration, and registration deadlines. Individuals must fully understand their tax obligations to avoid penalties and ensure compliance. The tax experts at Now Consultant provide expert guidance in corporate tax registration and compliance services.
What Is a Natural Person in Corporate Tax Law?
According to UAE corporate tax law, a natural person is an individual conducting business activities within the UAE. This differs from companies or legal entities; natural persons are subject to corporate tax if their business turnover exceeds specific thresholds of AED 375,000.
Eligibility Criteria For Corporate Tax
The UAE Corporate Tax Law applies to natural persons only when they are conducting a business or business activity within the UAE, have a permanent establishment, or derive state-sourced income as per Article 66 of the Corporate Tax Law.
Natural persons conducting business in the UAE become taxable when their annual turnover exceeds AED 1 million. It is mandated that only income derived from business activities is taxable under corporate tax regulations.
However, certain types of income are exempt from corporate tax, including wages, personal investment income, and real estate investment income, as outlined in Cabinet Decision No. 49 of 2023.
Double taxation agreements also play a significant role in determining the tax liabilities of natural persons, ensuring fairness and avoiding overlapping taxation between jurisdictions.
Corporate Tax Registration for Natural Persons – Process
If you fit within the taxable criteria, corporate tax registration is a mandatory requirement. Corporate tax registration for natural persons is an easy process by following the given steps:
Step 1: Determine Eligibility
The first step even before registering, is to determine whether your income qualifies for corporate tax as per Federal Decree-Law No. 47 of 2022.
Step 2: Prepare Required Documents
In the second step, the Federal Tax Authority demands to prepare the following documents for corporate tax registration:
- Emirates ID and passport copy.
- Trade license (if applicable).
- Financial records indicating taxable income.
- Business activity details.
Step 3: Log into EmaraTax
In the third step, open the EmaraTax portal on the FTA website and log in using your credentials or UAE Pass. If you are not registered, create a new account by providing the required details.
Step 4: Add Taxable Persons
In the fourth step, check whether any taxable person is linked to your profile; if not, you must add one to proceed. A taxable person refers to the individual or entity registering for corporate tax.
Step 5: Corporate Tax Registration
After successfully logging in and adding a taxable person, in the fifth step, you will be directed to the corporate tax dashboard, where you will select the ‘Register’ option. This step will initiate your corporate tax registration process.
Step 6: Follow Registration Guidelines
The portal provides guidelines for completing corporate tax registration. You need to follow the instructions and fulfill the requirements for corporate tax registration.
Step 7: Provide Entity Details
In this step, you can select “Natural Person” as the entity type from the dropdown menu. Here, you need to fill in your trade license number, legal structure, and registration number. These details must match the information on your trade license and other official documents.
Step 8: Add Business Activities
In this step, you have to add the business activities conducted under your trade license. Click on ‘Add Business Activities’ and choose the appropriate categories that describe the services or products your business offers.
Step 9: Add Authorized Signatory
In this step, you need to enter the details of the authorized signatory, who is responsible for handling tax matters. Furthermore, you need to provide the Emirates ID or passport number of the signatory and upload the necessary documents as proof of authorization
Step 10: Review and Submit Application
In the last step, you must review all the information you have entered to ensure it is accurate and complete. After confirmation, submit your application through the portal.
You will receive a message or email from FTA within 20 days when your registration is successfully processed.
Natural Person Corporate Tax Registration Deadline:
It is important for natural persons to comply with corporate tax regulations in a timely manner. The timeline for corporate tax registration varies based on residency status, according to the UAE Federal Tax Authority (FTA) Decision No. 3 of 2024.
For resident persons, the registration deadline is 31 March of the following Gregorian calendar year in which the business activities took place. For non-resident persons, the deadline is three months from the date they meet the criteria to be subject to corporate tax.
For example, for a business whose first tax period begins on January 1, 2024, and ends on December 31, 2024, the return and payment must be filed between January 1 and September 30, 2025.
Failure to register within the specified timelines may result in penalties under Cabinet Decision No. 75. A penalty of AED 10,000 will be imposed on each taxable person who does not submit their tax registration application on time.
How Can We Help You?
At Now Consultant, we have made corporate tax registration easy for natural persons conducting business activities in the UAE. Our expert team guides you at every step, ensuring you stay compliant with UAE tax laws and avoid the risk of penalties.
From assessing your eligibility and preparing the required documents to accurately completing your registration through the FTA portal, we help you complete the process with accuracy. We assist you in maintaining proper records, filing tax returns on time, and adhering to all legal obligations to protect your business from fines or penalties.
FAQs
What Documents Are Required For Corporate Tax Registration For Natural Persons?
To register for corporate tax as a natural person, you need a copy of your Emirates ID and passport, your trade license (if applicable), financial records showing taxable income, and details about your business activities.
What Are The Penalties For Failing To Register For Corporate Tax On Time?
Failing to register for corporate tax on time in the UAE results in penalties under Cabinet Decision No. 75 of 2023. The individual who misses the registration deadline is subject to a penalty of AED 10,000.
