Insights of FTA's Publication on the Registration of Natural Persons

Understanding the intricacies of corporate tax registration is crucial for individuals engaged in business activities in the UAE. The document Registration of Natural Persons sheds light on the process, eligibility criteria, and obligations related to corporate tax for natural persons.

Insights from the Document:

1. Corporate Tax Threshold: Natural persons with a total turnover not exceeding AED 1 million in a calendar year are exempt from corporate tax.
2. Nature of Income: Investment income related to real estate transactions is exempt from corporate tax, provided it does not involve a licensed business activity.
3. Taxable Business Activities: Engaging in a business or business activity exceeding the AED 1 million threshold necessitates corporate tax registration.
4. Tax Period and Turnover Calculation: The tax period aligns with the Gregorian calendar year, and turnover is calculated based on accrual accounting, unless the cash basis is applied.
5. Tax Registration Process: Individuals can register for corporate tax through the EmaraTax portal, with existing VAT or Excise Tax registrants using their current login credentials.
6. Documentation Requirements: Applicants need to provide contact details, passport and Emirates ID copies, and business-related documents if applicable.
7. Obligations Post Registration: Registrants must file tax returns, retain records for seven years, and promptly update registration details.
8. FTA Authority: The FTA can register a person for corporate tax if deemed necessary, with the right to appeal against such decisions.
9. Deregistration Process: Ceasing all business activities prompts deregistration, with a 3-month window to apply. Deregistration is not applicable if the person starts a new business in the same tax period.
10. Death and Tax Liability: In the event of a natural person's death, outstanding tax liabilities are settled from the estate.

Questions & Answers for better understanding:

1. Q: Who is exempt from corporate tax?A: Natural persons with a total turnover not exceeding AED 1 million in a calendar year.
2. Q: What documentation is required for tax registration?A: Passport and Emirates ID copies, contact details, and business-related documents if applicable.
3. Q: How is turnover calculated for tax purposes?A: Turnover is calculated based on accrual accounting, unless the cash basis is applied.
4. Q: Can a person appeal against FTA's decision to register them for corporate tax?A: Yes, a natural person has the right to appeal such decisions.
5. Q: What are the obligations post registration?A: Filing tax returns, retaining records for seven years, and updating registration details.
6. Q: Can a person deregister for corporate tax if their turnover falls below AED 1 million?A: Deregistration is only applicable if all business activities cease.
7. Q: What happens in the case of a natural person's death regarding tax liability?A: Tax liabilities are settled from the estate, either from its value or from heirs and legatees.
8. Q: How does the FTA determine the tax period for a natural person?A: The tax period aligns with the Gregorian calendar year, from January 1 to December 31.
9. Q: Is a natural person required to register for corporate tax if engaged in real estate transactions?A: Not if it is related to personal investment income and not conducted through a licensed business activity.
10. Q: Can a person continue to be registered if their turnover falls below AED 1 million but still conducts business activities?A: Yes, they retain their registration status and file a 'nil' tax return in such cases.

Understanding the nuances of corporate tax registration empowers individuals to navigate the regulatory landscape effectively. By following the outlined criteria and obligations, natural persons can ensure compliance with the UAE's corporate tax regulations.