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The UAE is known for its booming economy and if you have recently set up your business in the region, it’s time for you to understand its evolving regulatory framework. The global business hub is a popular choice for entrepreneurs and it has become one of the most sought after destinations for individuals. That said, the country has shifted from its tax-free status with the obligation of corporate tax registration UAE mandated for businesses in the region.
As it continues to evolve its regulatory framework, the classification of resident juridical persons has gained huge prominence. While operating in the UAE, it is important to understand resident juridical persons, particularly for entities established or recognized on or after March 1, 2024. In this blog, we will provide a clarity on what constitutes a resident juridical person and the associated implications for businesses operating within this framework.
Who is a resident juridical person in UAE?
Incorporation and recognition:
Effective management and control:
Categories of Juridical Persons
Here are the key categories for the classification of resident juridical persons:
Incorporated under the UAE legislation
- Onshore companies: The companies that are registered within the UAE's mainland jurisdiction.
- Free zone persons: The companies that are established within the various free zones in the UAE and enjoy specific benefits including tax exemptions and simplified regulatory requirements.
For these business entities, the compliance timeline for filing return for corporate tax in UAE is 9 months from the end of the financial year. Simply, this means that if a free zone person has a financial year ending on December 31, 2024, the due date for corporate tax return will be September 30, 2025.
Incorporated under the foreign legislation
The business entities that are incorporated or recognized under the legislation of foreign country or territory but are managed and controlled in the UAE are considered resident juridical persons. Such entities follow the complete tax registration process UAE and their return filing date for corporate tax is due 3 months from the date of incorporation, establishment, or recognition. For example, if a foreign business entity is recognized on July 15, 2024, its due date for corporate tax return will be October 15, 2024.
Implications for Businesses Established After March 1, 2024
- Tax registration: Newly established businesses must ensure they are registered for corporate tax with the Federal Tax Authority (FTA) as per the deadlines outlined above.
- Financial year considerations: Businesses need to be fully aware of their financial year end and plan accordingly to meet filing deadlines. To avoid mistakes, they can seek assistance from leading and trusted corporate tax consultants in Dubai.
- Documentation: Every business entity essentially needs to maintain accurate records and documentation to support their corporate tax filings. This can include financial statements and proof of effective management and control in the UAE.
- Compliance with UAE laws: Understanding the regulations governing resident juridical person can help businesses navigate the complexities of compliance and avoid potential penalties.
Conclusion
Whether you are a new business owner UAE or have set up a business in Dubai, it is always advised to partner with a trusted auditing and taxation firm. At A&A Associate, we support you in meeting all obligatory compliance without a single miss.
Connect with us today for expert guidance, tailored to your specific business needs! Contact at +971 54 793 9972 or enquiry@aaconsultancy.ae.
