FTA announces penalty waiver for late corporate tax registration

Background

Under the UAE Corporate Tax Law, resident taxpayers existing before 1 March 2024 were required to register for corporate tax by specific deadlines based on their trade license issuance date. Entities incorporated in the UAE on or after 1 March 2024, are required to register for corporate tax within three months from the date of their incorporation. Specific rules apply for non-resident entities with a Permanent Establishment or Nexus in the UAE¹.

Missing these deadlines typically resulted in an administrative penalty of AED10 thousand.

To ease the transition into the new tax regime and encourage compliance, the FTA has introduced a waiver initiative that allows eligible businesses to avoid or recover this penalty, provided they take timely action.

 

How the waiver works

The initiative applies to all entities required to register for corporate tax, including those that have already received a penalty or have yet to register. To qualify, the taxpayer must submit their corporate tax return or, in the case of exempt persons, their annual declaration within seven months from the end of their first tax period. Therefore, for most businesses, whose first tax period runs from 1 January 2024 to 31 December 2024, the corporate tax return should be submitted by 31 July 2025 in order to benefit from the penalty waiver.

Whether the penalty has been issued, paid, or not yet imposed, timely submission of the return or declaration can result in the penalty being waived or refunded to the taxpayer’s account.

 

Conclusion

Businesses that missed the corporate tax registration deadline still have an opportunity to avoid or recover the AED10 thousand penalty. To qualify, taxpayers must submit their corporate tax return within seven months from the end of their first tax period. This relief also applies to those who have already paid the penalty. All submissions must be completed through the EmaraTax platform.

 

Reference

• FTA announcement on Waiver of Penalties

 

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¹Please refer to our previous article to find out more about this topic: FTA announces deadlines for corporate tax registration | DLA Piper.