Tax Consultants & Bookkeepers in the UAE



D 37. What is a “Business” or “Business Activity”?

The terms “Business” and “Business Activity” as defined in the Corporate Tax Law identify when the activities of certain persons give rise to a UAE CT liability by considering the person to be a taxable person.

“Business” means any economic activity, whether continuous or short term, conducted by any person. It is implied that a business is conducted with a profit motive, and that there is the existence of some system and organisation to the activity conducted. However, a business or business activity for UAE CT purposes does not lose its identity simply because it does not make a profit.

For the application of the Corporate Tax Law to companies and other juridical persons, all activities conducted and assets used or held will generally be considered activities conducted, and assets used or held, for the purposes of a “Business”.

Individuals can earn income from wages and salaries, investments or from practising a commercial, industrial or professional activity, either directly or as sole proprietor of a business. For natural persons, a Cabinet Decision will be issued in due course specifying further information on what would bring a natural person within the scope of UAE CT.

Latest News

Federal Tax Authority opens pre- registration for corporate tax through the EmaraTax platform starting in January 2023

The Federal Tax Authority (FTA) has launched early registration for corporate tax through the EmaraTax platform for digital tax services, in line with Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (the “Corporate Tax Law”), which stipulates that Taxable Persons will become subject to Corporate Tax from the beginning of their first financial year that starts on or after 1 June 2023.

The Authority explained that the early registration period is available from January 2023 to May 2023 for certain categories of companies operating in the UAE. These selected companies will be receiving invitations from the FTA by email and SMS, allowing them to register via the EmaraTax platform.

Following this phase, the FTA will announce at a later date when registration will be open for other companies and businesses. The FTA will make sure to give ample time for companies and businesses to apply for registration and meet their legal obligations. When registration opens, priority will be given to companies and businesses that have a financial year starting on 1 June 2023. Read more..

Expert VAT Opinions

B31) I paid on time, but forgot to file my return. Can I avoid late fees?

The mistake means a Dh1,000 fee plus interest is owed to the Federal Tax Authority.

The quarterly VAT return process has two parts. First, you must complete and submit the VAT return online in the Federal Tax Authority’s Portal and secondly make the required VAT payment, which can be done through various channels, including e-dirham, visa or debit cards, bank transfer or through UAE Exchange. 

The FTA legislation explains that making a payment is not recognised until the corresponding VAT return has been filed. Therefore, despite making the payment in full and the funds reflected on your FTA account, the FTA don’t recognise that payment against your missing VAT return. Read more...

FTA Press Releases

Federal Tax Authority launches strategy to explore future of tax sector, strive for global leadership

The Federal Tax Authority (FTA) has launched its strategy to explore the future of the tax sector and strive for world-leading tax procedures. The strategy is built on a thorough assessment and follows comprehensive plans developed to map out the future of the UAE tax system, in line with international best practices.

In a press statement issued today, the Authority explained that launching the strategy formed part of its activities to mark World Future Day 2022, which began last week.

FTA Director General His Excellency Khalid Ali Al Bustani said: “The Federal Tax Authority’s strategy for exploring the future of the tax sector primarily aims to identify the basic motives, scenarios, and proactive measures required for sustainably upgrading tax procedures in the UAE, and promoting a culture of future-mapping within, paving the way for it to become a world leader in the field.” Read more..

Federal Tax Authority activates new and improved digital tax administration platform, EmaraTax

The Federal Tax Authority (FTA) has launched its new integrated and fully developed digital tax administration platform EmaraTax today (Monday, 5 December 2022). The platform has been successfully actiVATed, with all services now made available to taxpayers using the latest technologies implemented in the tax field around the world.

In a press statement, the FTA asserted that the transition from the electronic tax system that was previously used, to the new platform, was done seamlessly, with data of all existing users successfully migrated to EmaraTax, enabling them to easily use the new digital platform, with no effect on the transactions carried out by any of the Authority’s customers. All transfer procedures were completed over the National Day holiday.

The Authority noted that the EmaraTax smart application will be launched soon and made available for mobile devices. Read more..

Federal Tax Authority sets 31 December 2022 as deadline to apply for Re-determination of Administrative Penalties on Taxes

The Federal Tax Authority (FTA) has called on registered taxpayers to benefit from the Decision to Re-determine Administrative Penalties on taxes to be worth 30% of the total outstanding amount of penalties that were not paid before 28 June 2021, and to ensure they meet the conditions set out in the Cabinet Decision on re-determining administrative penalties imposed on tax law violations in the UAE.

The FTA stressed that taxpayers who are eligible to benefit from the Decision must complete all related procedures through the e-services portal on its official website before 31 December 2022 to be able to benefit from these facilities.

In a press statement issued today, the Authority explained that according to the relevant Cabinet Decision, which went into effect on 1 January 2022, tax registrants who were unable to meet the criteria for benefiting from the re-determination by 21 December 2021 will be able to apply for re-determining administrative penalties to be equal to 30% of the total outstanding fines by fulfilling the necessary conditions no later than 31 December 2022. Read more..

Maintenance of Financial records under VAT

As per Decree-Law, all businesses in the UAE need to record their financial transactions and ensure that their financial records are accurate and up to date. The final responsibility and accountability to comply with VAT is on the business.

Accounting Records and Commercial Books

As per Executive Regulations of Federal Law No. (7) on Tax procedures, Accounting Records and Commercial Books shall include the following:

  • Accounting books in relation to that Business, which include records of payments and receipts, purchases and sales, revenues and expenditures, as required under any Tax Law or any other applicable law, including:
    • Balance sheet and profit and loss accounts.
    • Records of wages and salaries.
    • Records of fixed assets.
    • Inventory records and statements (including quantities and values) at the end of any relevant Tax Period and all records of stock-counts related to Inventory statements.

Businesses that do not think that they should be VAT registered should maintain their financial records in any event, in case the authorities need to establish whether they should be registered.

Contact Finance Works to maintain your books and records and implement financial systems that are VAT ready and compliant.