Federal Tax Authority Announces Waiver Of Penalties For Late Corporate Tax Registration In UAE

The Federal Tax Authority (FTA) has started implementing a UAE Cabinet Decision to exempt certain corporate taxpayers from penalties for late registration submissions. To qualify, taxpayers must submit their Tax Return or Annual Declaration within seven months from the end of their first Tax Period or Financial Year, instead of the previous nine-month deadline.

The FTA clarified that this exemption applies only to the first tax period of a taxable person or exempted entity. This is valid regardless of whether the due date for the initial tax return falls before or after the new decision's implementation. The FTA also stated that if a taxpayer has already paid a penalty for late submission but meets exemption conditions, they will receive a refund credited to their account.

Registered individuals who submitted their tax returns before the exemption decision and incurred late penalties will also benefit. Any penalties paid will be refunded to their accounts. Khalid Ali Al Bustani, Director-General of the FTA, urged unregistered corporate taxpayers to quickly submit registration applications and tax returns via EmaraTax within the specified period to benefit from this exemption.

The FTA's strategy aligns with the Cabinet Decision by expediting tax procedures across business sectors and encouraging voluntary compliance with tax laws. "Widespread compliance is a key and contributing element in promoting economic growth," said Al Bustani, emphasising transparency in an evolving legislative environment.

Al Bustani praised the high number of corporate tax registrations in early 2025, noting over 543,000 registrations. This indicates growing awareness among businesses about complying with tax procedures. "The FTA is keen to continue communicating with all categories of business sectors through various awareness channels," he added, highlighting efforts to familiarise businesses with compliance procedures and address challenges.

The FTA explained that exemptions apply to all required registrants for corporate tax, regardless of whether they faced fines for delayed registration or not. Legal conditions for exemption include filing returns within seven months after the first tax period ends.

Legal Conditions for Exemption

If registered but fined for late submission without payment, filing within seven months exempts them from penalties. If fines were paid, filing within this timeframe ensures refunds. Unsubmitted registration applications require expedited submission followed by timely return filing for penalty exemption.

The FTA encourages those subject to corporate tax to familiarise themselves with Corporate Tax Law, Cabinet Decisions, and Guidelines on its website: https://tax.gov.ae/en/default.aspx.

With inputs from WAM