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Clause 1 of the Article 4 of the CT Registration Decision requires a Permanent Establishment (PE) of a Non-Resident Person, which was already existing prior to 01 March 2024 (Effective Date of the Decision) to register for UAE Corporate Tax within 09 months from the date when that Permanent Establishment began to exist in UAE.
Let's say a branch (PE) of Non-Resident Person started to exist in UAE on 01 May 2023, then 09 months after that date would be completed by 31 January 2024, whereas the CT Registration Decision itself was made public on 27 February 2024. How is it possible for that branch to register for UAE Corporate Tax with FTA before 31 January 2024 if it becomes aware of the 31 January 2024 deadline on 27 February 2024 (the date when the Decision was made public for the first time)?
What if there are more than one Permanent Establishments with different trade license renewal dates? Will the earlier date be deemed to be the date of the beginning of PE's existence in UAE?
It seems that FTA will have to come up with a clarification on this Decision pretty soon.
Article 4 - Timeline for the Tax Registration of Non-Resident Juridical Persons
1. A juridical person, that is a Non-Resident Person prior to the effective date of this Decision, shall submit a Tax Registration application in accordance with the following table:
Category of juridical persons | Deadline for submitting a Tax Registration application |
A person that has a Permanent Establishment in the State | (9) nine months from the date of existence of the Permanent Establishment |
A person that has a nexus in the State | (3) three months from the effective date of this Decision |
This decision has a transitional aspect for those businesses which have become subject to tax due to promulgation of corporate tax law. The logic used by the lawmakers is to use the point in time when a company starts its business in the UAE, and the window granted for registration reflects a standard and fair duration of time afforded to the taxpayers. The inconsistency referred above relates only to branches and other forms of permanent establishments, and I believe it will be quickly addressed by the FTA. On an overall level, the UAE Corporate Tax law has been masterfully drafted and compared to other revenue authorities, FTA is the fastest in my experience to curb any legal inconsistencies and give clear guidance to the masses.
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Contributor
Muhammad Altaf Hussain, Head of Accounting and Tax at AJMS LG, boasts 25+ years of expertise in accounting, tax, and corporate law. With leadership roles at AJMS LG, Baker Tilly Middle East, and EY, Altaf has delivered complex projects across diverse sectors.
