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UAE: Federal Tax Authority to waive penalty for late corporate tax registration

The Federal Tax Authority has today announced that it has begun implementing the UAE Cabinet Decision to exempt certain corporate taxpayers from administrative penalties resulting from the late submission of registration applications, within the specified deadline.

To qualify for the waiver of the penalty, the taxable person (or exempted categories) must submit their Tax Return (or Annual Declaration) within a period not exceeding seven (7) months from the end of their first Tax Period (or first Financial Year), instead of nine months.

The FTA further clarified that the exceptional condition for benefiting from the exemption by submitting the tax return (or the annual declaration) within a period not exceeding seven (7) months from the end of the tax period, applies only to the first tax period of the taxable person (or the exempt person required to register). This is regardless of whether the due date for submitting the first tax return (or first annual declaration) falls before or after the implementation of the new decision.

The Authority added that if a taxable person has paid the administrative penalty for late submission of the corporate tax registration application and meets the conditions for benefiting from the exemption, the paid penalty will be refunded, and the amount will be credited to the taxable person’s account with the Authority.

Likewise, registered persons who submitted their tax returns before the implementation of the exemption decision and were subject to a late submission penalty will also be exempted, and any penalties already paid will be credited back to their accounts with the Authority.

Commenting on the announcement, Khalid Ali Al Bustani, Director-General of the FTA, called on all unregistered corporate taxpayers to expedite the submission of corporate tax registration applications and tax returns via EmaraTax. He added that submissions should be made within the period specified by the Cabinet Decision to take advantage of the exemption.

Aligned to the Cabinet Decision, FTA’s core strategy has been structured around expediting tax procedures for all business sectors and to encourage voluntary compliance with tax laws.

“Widespread compliance is a key and contributing element in promoting economic growth and the FTA remains committed to full transparency in relation to a flexible and constantly updating tax legislative environment,” he said.

Praising the high turnout of corporate tax registrations during the first quarter of 2025, he also revealed that the number of corporate tax registrations now exceeded 543,000. This reflects the growing awareness among business sectors of the importance of complying with tax procedures.

“The FTA is keen to continue communicating with all categories of business sectors through various awareness channels to help familiarise them with compliance procedures, explore their views, and formulate methods to overcome any challenges they may face,” he added.

Regarding the cases to which the exemption applies and how to benefit from the initiative, the FTA explained that, in general, the exemption applies to all persons subject to registration for corporate tax, regardless of whether the taxpayer applied for registration and was subject to an administrative fine for delaying registration within the specified deadline, or did not apply for registration.

The legal conditions for exemption are:
* If the taxpayer (or exempt person required to register) has been registered, but has been charged a late penalty and has not paid it, he or she must file the return (or annual return) within seven (7) months of the end of the first tax period (or first Financial Year) in order to be exempt from the delay penalty.
* If a taxpayer (or an exempt person who is required to register) has been registered, a late penalty has been imposed and paid, the taxpayer must file the return (or annual return) within seven (7) months of the end of the first tax period to be exempt from the late penalty. The amount paid will then be refunded to the taxpayer's account.
* If a taxpayer's registration application has not been submitted. In that case, the taxpayer (or exempt person required to register) must expedite the registration application and then submit the tax return (or annual declaration) within seven (7) months of the end of the first tax period or first financial year to be exempt from the late penalty.

The FTA encourages those subject to corporate tax to familiarise themselves with the Corporate Tax Law, Cabinet Decisions and Guidelines on the Law through the FTA's website at the following link: https://tax.gov.ae/en/default.aspx.