The Challenge
"About eighteen months after UAE Corporate Tax came into force, a sole establishment owner walked into our office holding a Corporate Tax registration certificate he did not need. He had registered on his own, unaware that a sole establishment only has to register for Corporate Tax once its turnover crosses AED 1 million. His business had never come close to that figure."
The client, whom we shall call Mr A, operated a sole establishment, referred to here as ABC, with annual turnover comfortably below the AED 1 million threshold set for natural persons under the Corporate Tax Law. Because a sole establishment below this threshold is not required to register for Corporate Tax, ABC’s registration was unnecessary from the outset and had begun to generate compliance obligations, filings, and deadlines that simply did not apply to his business.
Our Approach
- Threshold review — we checked ABC's actual turnover against the AED 1 million registration threshold for sole establishments under the Corporate Tax Law.
- Confirm the mismatch — we established that the registration had been made in error and was not legally required given the turnover level.
- Guided deregistration — we advised Mr A to deregister and managed the deregistration process with the FTA on his behalf.
Our approach starts with checking whether a business is even in scope before worrying about how to comply, because unnecessary registration creates real compliance burden for no legal benefit.
The Result
With our guidance, ABC successfully deregistered from Corporate Tax, removing the compliance burden that had been mistakenly taken on. The business is now compliant only with Value Added Tax, as required, with no unnecessary Corporate Tax filings or obligations to manage.
The Takeaway
"Registering for a tax you are not required to pay is not caution, it is an avoidable burden. Always check the actual threshold before you register."
