FTA Offers Corporate Tax Registration Penalty Waiver

Under the UAE Corporate Tax Law, all taxable businesses are required to register for Corporate Tax through the Federal Tax Authority (FTA) within a specified timeframe. Failure to do so leads to an administrative penalty of AED 10,000, as per Cabinet Decision No. 75 of 2023 on administrative penalties for tax violations. However, in a move to support businesses and encourage timely compliance, the FTA has introduced an initiative to waive this penalty, subject to specific conditions.

What is the Initiative?

The FTA initiative allows eligible taxpayers to avoid or receive a refund of the AED 10,000 penalty for late registration if they comply with a key requirement:

Submitting the corporate tax return (or annual declaration, for exempt entities) within 7 months from the end of their first tax period.

Key Waiver Condition

To qualify for the penalty waiver, businesses must meet the following requirements:

Taxable persons must submit their corporate tax return within 7 months from the end of their first tax period.
Exempt persons (those not subject to corporate tax) must submit their annual declaration within the same 7-month timeframe.

This condition applies regardless of whether the penalty has already been issued or paid.

Who Can Benefit?

This initiative applies to:

Companies that missed the registration deadline and have already received the AED 10,000 penalty
Entities that have not yet registered for corporate tax
Taxpayers who have paid the penalty but submitted returns within the required 7-month window

Scenarios Where the Penalty Waiver Applies

If you registered late and received a penalty, but haven’t paid it yet, and you submitted your corporate tax return within seven months from the end of your first tax period, you don’t have to pay the AED 10,000 penalty. It will be waived.
If you registered late, received a penalty, and haven’t paid or submitted your tax return yet, don’t worry. You still have time. If you submit your return within seven months from the end of your first tax period, the AED 10,000 penalty will be waived.
If you registered late and already paid the penalty but haven’t submitted your return yet, you can still get your money back. Just file the return within the same seven-month window, and the penalty amount will be refunded to your tax account.
If you registered late, paid the penalty, and also submitted your return within seven months, you’re fully covered. The FTA will automatically refund the penalty to your tax account.
Even if you haven’t registered for corporate tax yet, you can still avoid the penalty. Simply complete your registration and submit your tax return or annual declaration within seven months from the end of your first tax period. If a penalty is issued, it will be waived.

What is the First Tax Period, and When Should You File to Avoid Penalty?

Under the UAE Corporate Tax Law, the first tax period for most businesses starts on 1 January, especially for those following a calendar year.

For example:

If your company’s financial year runs from 1 January to 31 December 2024, your first corporate tax period will be from 1 January 2024 to 31 December 2024, and the tax return must be submitted by 30 September 2025

To avoid the AED 10,000 penalty for late registration, you must:

Register for corporate tax, and
Submit your corporate tax return by 31 July 2025, which is 7 months from the end of your first tax period.

Missing this deadline could result in the penalty being applied or becoming non-refundable if already paid.

Why Does This Matters for UAE Businesses?

This waiver is a significant relief for businesses that missed the registration deadline, especially small and medium enterprises (SMEs) that might be unfamiliar with UAE’s corporate tax procedures.

Key Benefits:

Avoids or recovers the AED 10,000 penalty
Promotes timely compliance
Eases the financial burden on businesses
Reduces audit risks and legal issues

How to Apply for Corporate Tax Registration and File Returns in Abu Dhabi, UAE?

All registration and return submissions must be done through the EmaraTax platform:

Step-by-Step Actions:

Register your business for Corporate Tax if not already been done.
Check your first tax period and calculate the 7-month deadline.
Submit your tax return or annual declaration via EmaraTax.
Maintain records for compliance and future audits.

Need Help Navigating UAE Corporate Tax?

Navigating the UAE’s Corporate Tax regulations can be complex, especially when it comes to deadlines, exemptions, and penalty waivers. That’s where we come in. At GAAP Audit, our team of FTA-approved tax agents and consultants is ready to help you:

We offer specialized solutions tailored to your business structure and tax obligations.
Our goal is to help you stay compliant, avoid penalties, and focus on growth.