Compliance Requirements After Incorporation in the UAE

After incorporation, UAE companies must manage their compliance with various tax and financial laws. We discuss these obligations.

By Arendse Huld

After a company has been established in the UAE, there are a range of compliance requirements it must undergo to ensure adherence to the country’s financial and tax regulations. These include a variety of tax registration obligations, which usually need to be completed within a set deadline, as well as beneficial owner disclosure requirements, and financial audit obligations.

Below we provide an overview of the some of the tasks companies must complete after incorporating a business in the UAE.

Ultimate Beneficial Owner disclosure requirements

All companies in the UAE, whether they are incorporated in the mainland or a Free Zone, must disclose their Ultimate Beneficial Owner (UBO).

The UBO requirements in the UAE are part of the country’s efforts to enhance transparency and combat financial crimes such as money laundering and terrorism financing. These requirements mandate that entities operating in the UAE identify and disclose their ultimate beneficial owners.

However, companies owned by a local or federal government or their subsidiaries, or that are set up in the Dubai International Finance Centre or the Abu Dhabi Global Market financial center are exempt from disclosing the UBO. Companies listed on regulated stock exchanges are also not required to separately disclose their UBO, as this is already covered by information disclosure requirements related to their listing.

The UBO is the natural person who owns or controls the business through direct or indirect ownership of 25 percent or more shares, or someone who holds 25 percent or more of the voting rights or has the right to appoint or dismiss the majority of the establishment’s managers.

Companies must establish a Register of Beneficial Owners within 60 days of its formation, and update it within 15 days of any changes. The register must include the UBO’s full name, nationality, birth details, residential address, identification details (passport/ID), and the basis and date of becoming or ceasing to be a UBO.

Register of Partners and Shareholders

In addition to declaring the UBO, companies must also maintain a Register of Partners and Shareholders, in which it includes the data about each of its partners or shareholders. Any changes must be updated and recorded within 15 days.

The register must include:

• Shares and voting rights: Number of shares held by each partner or shareholder, their categories, and associated voting rights.
• Date of acquisition: The date on which each partner or shareholder acquired their status in the company.
• For partners and shareholders that are natural persons: Full name (as per identity card or passport), nationality, address, place of birth, employer’s name and address, and a true copy of a valid passport or ID.
• For partners and shareholders that are corporate entities:
  • Name, legal form, and memorandum of association.
  • Head office address or the principal address of the business and, in case of a foreign company, the name and address of its legal representative in the State, with proof thereof.
  • Articles of Association or any other similar documents approved by the relevant entity in the State.
  • Names of the relevant persons who are holding higher management positions in the company, providing their data from their passports or identity cards, including such documents’ numbers, issuance and expiry dates, and the issuing entity.

The company must also include data on any partners or shareholders acting as Trustor or Nominee Board Members in the register. A manager or board member acting as a Nominee Board Member must notify the company of their status and provide the necessary data within 15 days of becoming a nominee board member.

Tax registration and compliance requirements

Corporate tax

The UAE officially began levying a corporate tax (CT) rate of 9 percent on all businesses in June 2023. As such, all businesses must register for CT within a certain deadline and obtain a CT registration number.

Companies that were established before March 31, 2024, must submit their CT registration before a certain deadline depending on the month in which their business license was issued. These deadlines are outlined in the table below.

Companies established on or after March 1, 2024 must apply for tax registration within the following timelines:

• For resident companies: Within three months from their date of incorporation, establishment, or recognition.
• For resident companies recognized under foreign legislation but managed and controlled in the UAE: Within three months from the end of their financial year.
• For non-resident companies that have a permanent establishment in the UAE: Within six months of the existence of the permanent establishment.

Taxpayers are required to file CT returns for each tax period within nine months of the end of each tax period. Any CT that taxpayers are liable for must generally also be paid within this timeframe.

The specific deadline for filing and paying CT, as well as the start of the first tax year since the UAE began levying CT, depends on the company’s financial year, as shown in the table below.

Companies can apply for tax registration online through the Federal Tax Authority’s (FTA) EmaraTax online portal. The application will usually be processed within 20 business days unless further information is required by the FTA, which could further delay the processing by 20 business days. The application is free of charge.

The following documents are required from companies:

• Trade license
• Emirates ID / Passport of authorized signatory
• Proof of authorization for the authorized signatory

Value-added tax registration

In addition to CT, companies must also register for value-added tax (VAT). The UAE has imposed a VAT rate of 5 percent at the point of sale since 2018.

All businesses with taxable supplies and imports exceeding AED 375,000 are obliged to register for VAT. Companies that fall below this threshold but have supplies and imports in excess of AED 187,500 can voluntarily register for VAT.

Companies are required to register for VAT within 30 days of exceeding the mandatory threshold.

As with CT registration, companies can apply for VAT registration through the EmaraTax e-services platform. The following documents must be submitted:

• Valid trade license(s)
• Passport/Emirates ID of the authorized signatory(s)
• Proof of authorization for the authorized signatory(s)
• Contact information
• Bank letter validating the bank account details of the applicant

Certain other documents may also be required to declare taxable supplies and expenses; see the full list here.

The application processing period is 20 business days, and the procedure is free of charge.

Companies must file VAT returns with the FTA within the 28th day of the month following the tax period, which can be either one month or one quarter. The VAT returns filing can also be conducted through the e-services platform.

Excise tax registration

The UAE imposes an excise tax on certain goods deemed harmful effects on health or the environment in order to reduce their consumption.

Goods subject to excise tax and the applicable tax rate are:

• Tobacco and tobacco products – 100 percent.
• Liquids used in electronic smoking devices and tools – 100 percent.
• Electronic smoking devices and tools – 100 percent.
• Carbonated drinks (excluding sparkling water) – 50 percent.
• Energy drinks – 100 percent.
• Sweetened drinks – 50 percent.

Companies importing or producing excise goods for consumption in the UAE, releasing excise goods from designated zones, or, in some cases, stockpiling excise goods, must register for excise tax.

There is no set deadline for registering for excise tax. Companies planning on engaging in the above activities must register for excise tax before beginning operations. Excise tax registration can be completed through the e-services platform, and processing takes around 20 business days.

Required documents include, but are not limited to:

• Valid trade license/business license.
• Passport/emirates ID of the authorized signatory.
• A copy of the legislation that establishes the entity in case the registration request was in relation to a federal or local government entity.
• Proof of authorization for the authorized signatory.
• Official declaration, on the entity’s printed letterhead, signed and stamped by the authorized signatory, stating the entity’s activity in relation to goods subject to excise tax, in addition to the activity type (production, import, stockpiling) and the start date of the activity.
• A bank letter validating the bank account details for the registrant
• Other related documents depending on the basis on which the company is registering.

Financial reporting and audit compliance requirements

Foreign companies registered in the UAE, whether in the mainland or free zones, are required to maintain proper accounting records and undergo an annual financial audit.

The audited financial statements must be prepared in accordance with International Financial Reporting Standards (IFRS). These statements must include the balance sheet, income statement, statement of cash flows, and any other relevant financial disclosures.

Financial reporting and audit requirements vary depending on the company structure and where it is located. In the UAE’s free zones, each free zone authority has its own regulations regarding financial reporting. However, the general principles of maintaining proper records, preparing annual financial statements, and conducting audits remain consistent. For example, entities operating in the DIFC or ADGM must comply with specific regulations set forth by these authorities.

The Commercial Company Law (CCL) requires companies to keep accounting records of their transactions. These accounting records must be kept at the company’s headquarters for a period of at least five years from the end of the company’s fiscal year.

Under the CCL, joint stock companies and limited liability companies (LLCs) are required to have one or more auditors to carry out an annual audit of accounts. Other types of companies can appoint an auditor in accordance with CCL.

The auditor’s report and the balance sheet and the profits and loss account must be deliberated and approved by the company’s Annual General Assembly.

Under the Corporate Tax Law, the FTA may also request a company to prepare and maintain audited or certified financial statements.

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