The UAE for almost over a decade has positioned itself as the most ideal location for international entrepreneurs and investors alike to augment their new business ventures, backed by zero taxes and reduced compliances. However, the business landscape has drastically changed, ever since the advent of corporate tax in 2023. In fact, to effectively manage UAE corporate tax, it has become prudent to have the best corporate tax consultants in UAE to avoid paying penalties on late corporate tax registrations.
Having set a new era of tax compliance and regulations within the UAE’s business landscape, the government has demonstrated its readiness to refine the country’s taxation framework. At the same time, it ensures that all businesses collectively contribute to the nation’s holistic socioeconomic development. In tandem, the issuance of Cabinet Decision No.10 of 2024 emerges as an amendment to the previous Cabinet Decision No. 75 of 2023, which underlines the penalties set for late corporate tax registration.
Understanding UAE’s Ministry of Finance's New Tax Compliance Penalty
The Federal Tax Authority has recently established new penalties under the recently amended law, aimed at curbing late corporate tax registration. Having said that, an administrative penalty of AED 10,000 has been imposed on businesses upon the failure of corporate tax registration within the timeline outlined by the FTA.
In effect, from 1 March 2024, the said penalty will not only be instrumental in encouraging taxpayers to ensure compliance with the regulations but will also ensure corporate tax registration takes place in a timely manner. Accelerating UAE’s journey to herald itself as the ultimate global business leader, notably the said penalty has been aligned with the penalty of late registration for excise tax and VAT.
Implications of Late Corporate Tax Registration
While this move will be a major catalyst for UAE’s revolutionary transformation to achieve exponential growth on the global front, failure to comply with timely registration can have far-reaching consequences. Delving beyond the heavy fine, it can cause potential delays in obtaining tax clearance certificates, which can significantly hamper business operations.
Furthermore, in some cases, it can often result in increased scrutiny from the FTA, which can not only tamper with the company’s reputation but can lead to further investigations incurring additional penalties. At the end of the day, noncompliance with UAE’s new tax regulations including late corporate tax registration will result in much more than mere monetary damage.
Series of Revised Administrative Penalties
Listed Fines | Previous Penalty | Revised Changes |
Non-Submission of Registration Application | AED 20,000 was previously imposed on late corporate tax registration. | At present, the fine has been reduced to AED 10,000. |
Non-Submission for Deregistration Application | At first, the penalty for late corporate tax registration was set at AED 10,000. | Now, the penalty is lowered by AED 1,000 for each additional month of non-compliance. |
Offering Services without filing a Tax Invoice | Prior penalty for late corporate tax registration was set at AED 5,000 for each tax invoice. | Currently, it has been updated to AED 2,500 for each instance. |
By taking proactive steps, and consulting with the right tax consultants in UAE, you can save yourself from late corporate tax registration. It’s imperative that you don’t wait till the deadline to start your registration process.
It’s time you contact, A&A Associate LLC, to help you remain compliant with the new regulations, and avoid any sort of penalties. Connect with us for unparalleled registration guidance and compliance practices.