The FTA has announced an initiative for the waiver of penalties for late corporate tax registration. This is largely intended to support the UAE business sector by providing mechanisms that allow entities to meet their tax obligations.
Corporate tax registration criteria:
The UAE introduced the corporate tax regime through Federal Decree Law No. 47 of 2022. It was made applicable from the financial year starting on 1st June 2023.
Read more about the Corporate Tax Law in UAE
Articles 3, 4, and 5 of the Federal Tax Authority Decision No. 3 of 2024 provide registration timelines for different taxable persons.
Refer to our blog for detailed information on timelines for Corporate Tax Registration.
Penalty for failure to register with corporate tax:
The Ministry of Finance issued Cabinet Decision No. 10 of 2024 that specifies a penalty of AED 10,000 to be imposed for failure to meet the registration deadlines provided.
Waiver of penalty:
As per the announcement, if a taxable person submits the tax registration application within seven months from the end of the first tax period, they shall be eligible for a waiver of the penalty. This initiative targets all entities required to register for corporate tax, including those who have either incurred a penalty due to late submission of the registration application or have not yet submitted the application.
Know your First Tax Period under UAE Corporate Tax
On the other hand, persons exempt from corporate tax are required to submit an annual declaration within seven months from the end of their first financial year.
A few illustrations where a waiver applies:
- The Taxpayer completed the registration process and was issued a penalty for late registration, which is unpaid. The taxpayer then submitted tax returns within seven months from the first tax period. The taxpayer is eligible for a waiver of the penalty.
- The taxpayer completed the registration process and was issued a penalty for late registration, which is unpaid. The taxpayer has not yet submitted tax returns.
- Taxpayer is eligible for a waiver of the penalty only if he submits the tax return within seven months from the end of the tax period.
- Taxpayer completed the registration process and was issued a penalty for late registration, which was subsequently paid. Taxpayer also submitted tax returns within seven months from the first tax period.
- Taxpayer is eligible for a waiver of the penalty. The penalty paid will be refunded to their tax account.
- Taxpayer has not submitted the corporate tax registration application yet.
Taxpayer must complete the registration and submit the tax return within seven months from the end of the first tax period. The penalty will be waived if paid.
Corporate Tax Return UAE: Filing Deadline & Process
Next course of action:
For taxpayers who have been penalized for late filing of Corporate Tax registration, this move provides another opportunity for businesses to comply with the law and remain compliant.
