When corporate tax was introduced in the UAE, there was a lot of uncertainty around the rules. Who should register for the tax? Did everyone have to pay it? What were the deadlines? The AED 10,000 UAE corporate tax penalty for late registration caused a lot of stress for tax residents.
So, the Federal Tax Authority (FTA) recently announced a penalty waiver for all taxable persons and entities to encourage tax compliance and give the country’s residents some extra time to understand the rules around corporate tax in UAE, especially smaller businesses who don’t have a lot of resources.
UAE & Corporate Tax
Corporate tax was only introduced in the country a few years ago. It is levied at only 9%, making the UAE a highly business-friendly country. Additionally, this tax is only collected from taxable entities (and persons) whose taxable income crosses AED 375,000.
Most tax residents have to register for corporate tax even if they don’t owe the FTA to maintain general compliance. Hiring an expert to take care of your corporate tax registration is an easy way to avoid mistakes.
What is the New FTA Penalty Waiver?
The UAE corporate tax penalty has been waived, giving businesses a chance to avoid paying the AED 10,000 penalty. This waiver is not going to last forever, it is a short-term rule intended to give tax residents some relief.
The FTA has introduced a new deadline for corporate tax registration and payment. If you miss this deadline, you will have to pay the penalty.
UAE Corporate Tax Deadlines
The corporation tax deadline depends on when your financial year (FY) ends. You now have seven months from the end of your FY to file and pay what you owe. For example, if your FY ends on April 30, 2025, you have until November 30, 2025 to register and pay.
If you’re still confused, here are a few common cases:
Scenario | Next Steps |
You haven’t registered for corporate tax | Register on the FTA website and file a return within seven months of your tax period |
You registered late, paid the penalty but haven’t filed a return | Register on the FTA website and file a return within seven months of your tax period then wait for your refund |
You registered late, paid the penalty but filed your returns on time | Penalty will be refunded |
You registered late, didn’t pay the penalty, and haven’t filed your returns | Register on the FTA website and file a return within seven months of your tax period to be eligible for the penalty waiver |
You registered late, didn’t pay the penalty, but filed your returns on time | You don’t have to pay the penalty |
How to Get a Tax Penalty Refund
Hire A&A Associate to Handle Your Corporate Tax Needs
A&A Associate is one of the leading accounting firms in Dubai, offering a multitude of financial services including tax registration, tax compliance, and bookkeeping services for businesses of all sizes across the UAE.
We also house seasoned consultants who can streamline business setup in Dubai, making it a hassle-free experience for foreign entrepreneurs and budding business owners.
FAQ’s
There is a AED 10,000 penalty for late corporate tax registration in the UAE. The FTA recently announced a waiver for tax residents who register and submit their returns within seven months of their financial year.
Every taxable individual and entity has to register for corporate tax. However, only residents with taxable incomes over AED 375,000 have to pay the tax.
Every individual and business who is considered to be a “tax resident” and makes more than AED 375,000 has to pay tax by the corporation tax deadline.
Anyone who is eligible to register for corporate tax is eligible to get the penalty waiver. All they have to do is register for corporate tax, file and pay corporate tax within seven months of the end of your financial year.
The corporate tax period in the UAE depends on the end of a company’s financial year. The UAE corporate tax law states that you have to file your returns and pay your tax within seven months of the FY end to avoid getting penalties.
A financial year is generally 12 months, but can be shorter or longer in special cases. New businesses in UAE may have a FY longer than 12 months.
You can file corporate tax in the UAE on the FTA website, specifically on the EmaraTax portal. If you don’t file on time, you risk facing fines. You have to register for corporate tax before you can file a return.
Previously, there was an AED 10,000 penalty for late tax registration. The FTA recently introduced a penalty waiver to help businesses adjust to the new rules and encourage voluntary tax compliance.
If you still haven’t registered for corporate tax, you risk facing a UAE corporate tax penalty. You must register on the FTA website as soon as possible and file a return within seven months of your financial year end to be eligible for the penalty waiver.
You can get an automatic refund of the UAE corporate tax penalty by registering for corporate tax and filing and paying your tax seven months after your financial year.
