The Federal Tax Authority (FTA) in the UAE has introduced an initiative to waive administrative penalties for late Corporate Tax registration. This initiative aims to give relief to companies which received a late corporate tax registration penalty.

According to the corporate tax regulation in the UAE, all companies are expected to register for corporate tax irrespective of their turnover or business operations. Some companies are exempt from registering, subject to conditions specified in the regulations. The deadlines to register for corporate tax were clearly specified by the Federal Tax Authority. Failure to register for corporate tax within the timeframe will attract a penalty of AED 10,000.

Recently, the FTA announced that for businesses which got a late corporate tax registration penalty and paid to the FTA already or remain unpaid, they will get a penalty waiver, subject to meeting conditions outlined below.

Conditions for Waiver of late CT registration penalty

The Cabinet has approved that the FTA may waive and refund (if paid) the late registration administrative penalty if the taxable person

• Registered for corporate tax
• A late corporate tax registration penalty has been received
• submits their first Corporate Tax Return within seven monthsfrom the end of their first Tax Period, instead of the standard nine-month due date.

For exempt persons who were subject to the penalty and later approved for exemption, they may also benefit if they submit their annual declaration within seven months from the end of their first Financial Year.

This initiative applies to individuals and entities required to file a tax return, including:

• Natural or juridical persons who must file a Tax Return. (Sole Establishments, LLCs, Free Zone Companies, Offshore Companies, Foreign companies with PE or Nexus in the UAE).
• Persons who register as taxable but later form or join a Tax Group.
• Qualifying Public Benefit Entities listed in Cabinet Decision No. 37 of 2023.
• Exempt Persons under Article 4(1)(f), (g), (h), or (i) of the Corporate Tax Law who initially register as taxable but are later approved for exemption.

Actions by the FTA to waive the penalty

If the conditions for the waiver are met, the FTA will take the following actions:

• For unpaid penalties: The penalty will be waived and will no longer appear as payable on the person’s Emaratax Corporate Tax account.
• For paid penalties: The AED 10,000 penalty amount will be automatically credited to the person’s EmaraTax Corporate Tax account. The credited amount can either be used to settle Corporate Tax Payable or a refund can be requested via Emaratax portal.
• Reconsideration requests:If a reconsideration request for the late registration penalty has been submitted, it will be considered null and void as the penalty will be waived under this initiative. If the reconsideration request was already approved and the penalty waived, the person will not be eligible for a further waiver under this initiative.

Important points to remember

• This initiative applies only to the first Tax Period, whether in the past or future.
• It does not affect the deadline for settling Corporate Tax Payable, which remains nine months from the end of the first Tax Period.
• For tax groups, if the Tax Group files its Tax Return within seven months from the end of the Tax Period, any member of the Tax Group subject to the Late Registration Penalty will have it waived.

How long will you have to wait to get the penalties removed or refunded?

The FTA has not yet declared a date for processing the refund or removing the penalty. However, the action will be taken by the FTA mostly after the actual due date of filing the tax return, which is 9 months from the end of the corporate tax period.

Examples

1. Company A is a Taxable Person with a first Tax Period of 1 January to 31 December 2024. Company A fails to submit a Tax Registration application within the timeframe specified in FTA Decision No. 3 of 2024. Therefore, it is subject to a Late Registration Penalty of AED 10,000, which it has not paid. Company A submits its Tax Return on 8 July 2025, which is within seven months from the end of the Tax Period, i.e. before 31 July 2025.

Since Company A submits its Tax Return within seven months from the end of its first Tax Period, the FTA waives the Late Registration Penalty of AED 10,000 in Company A’s EmaraTax Corporate Tax account, and it no longer appears as payable

2. Company B is a Taxable Person with a first Tax Period of 1 June 2023 to 31 May 2024.Company B fails to submit a Tax Registration application within the timeframe specified in FTA Decision No. 3 of 2024. Therefore, it is subject to a Late Registration Penalty of AED 10,000, which it has paid. Company B submits its Tax Return on 13 December 2024, which is within seven months from the end of the Tax Period, i.e. before 31 December 2024.

Since Company B has submitted its Tax Return within seven months from the end of its first Tax Period, the FTA waives the Administrative Penalty of AED 10,000 in Company B’s EmaraTax Corporate Tax account. The FTA refunds the penalty amount of AED 10,000 by crediting the Company B’s EmaraTax Corporate Tax account

3. Company C is a Taxable Person with a first Tax Period of 1 September 2023 to 31 August 2024. Company C fails to submit a Tax Registration application within the timeframe specified in FTA Decision No. 3 of 2024. Therefore, it is subject to a Late Registration Penalty of AED 10,000, which it has not paid. Company C subsequently submits a request to the FTA to reconsider the Late Registration Penalty. Company C submits its Tax Return on 14 February 2025, which is within seven months from the end of the Tax Period, i.e. before 31 March 2025.

Since Company C submits its Tax Return within seven months from the end of its first Tax Period, the FTA waives the Late Registration Penalty of AED 10,000 in Company C’s EmaraTax Corporate Tax account. Company C’s reconsideration request in relation to the Late Registration Penalty is now null and void, as the applicable penalty has been waived.

4. Company X and its two wholly owned subsidiaries, Company Y and Company Z, are Taxable Persons with a Financial Year of 1 January to 31 December. Company X submits a Tax Registration application within the timeframe specified in FTA Decision No. 3 of 2024. Therefore, it is not subject to a Late Registration Penalty. Company Y and Company Z fail to submit Tax Registration applications within the timeframe specified in FTA Decision No. 3 of 2024. Therefore, they are each subject to a Late Registration Penalty of AED 10,000. Only Company Z paid the Late Registration Penalty. Subsequently, Companies X, Y and Z successfully applied to form a Tax Group, Tax Group XYZ, in accordance with Article 40 of the Corporate Tax Law. Tax Group XYZ submitted its Tax Return on 18 June 2025, which is within seven months from the end of the Tax Period, i.e. before 31 July 2025.

Since Tax Group XYZ submitted its Tax Return within seven months from the end of its first Tax Period, the FTA waives the Late Registration Penalty of AED 10,000 for Company Y and Company Z. The FTA refunds the penalty amount of AED 10,000 paid by Company Z by crediting Tax Group XYZ’s EmaraTax Corporate Tax account. The penalty amount of AED 10,000 applied on Company Y shall not be credited since it had not paid the Late Registration Penalty.

5. Mr S is a Taxable Person with a first Tax Period of 1 January to 31 December 2024. He failed to submit a Tax Registration application by 31 March 2025, i.e. the timeframe specified in FTA Decision No. 3 of 2024. Therefore, he is subject to a Late Registration Penalty of AED 10,000. Mr S is required to file his Tax Return by 30 September 2025, i.e. within nine months from the end of its Tax Period. Mr S submitted his Tax Return on 1 June 2025, which is within seven months from the end of the Tax Period, i.e. before 31 July 2025.

Since Mr S submitted his Tax Return within seven months from the end of his first Tax Period, the FTA waives the Late Registration Penalty of AED 10,000 in Mr S’ EmaraTax Corporate Tax account

6. Entity D, incorporated in the UAE, has a Financial Year of 1 January to 31 December 2024. Entity D is listed in Cabinet Decision No. 37 of 2023 as a Qualifying Public Benefit Entity.Entity D failed to submit a Tax Registration application within the timeframe specified in FTA Decision No. 3 of 2024, and is subject to a Late Registration Penalty of AED 10,000. Since Entity D is listed in the Cabinet Decision No. 37 of 2023, it is required to file its annual declaration by 30 September 2025, i.e. within nine months from the end of its Financial Year. Entity D submits its annual declaration on 30 June2025, which is within seven months from the end of the Tax Period, i.e. before 31 July 2025.

Since Entity D submits its annual declaration within seven months from the end of its first Financial Year, the FTA waives the Late Registration Penalty of AED 10,000 in Entity D’s EmaraTax Corporate Tax account.

7. Company E is an investment fund, established in the UAE, that meets the conditions to be a Qualifying Investment Fund under Article 4(1)(f) of the Corporate Tax Law. Before Company E can submit an application to the FTA to be an Exempt Person under Article 4(1)(f) of the Corporate Tax Law, it is considered a Taxable Person. Therefore, it must submit a Tax Registration application within the timeframe specified in FTA Decision No. 3 of 2024.Company E fails to do so and is, therefore, subject to a Late Registration Penalty of AED 10,000. Subsequent to registration, Company E successfully applies to the FTA to be treated as a Qualifying Investment Fund, as per Article 4(1)(f) of the Corporate Tax Law. Company E has a Financial Year of 1 April to 31 March 2025 and, therefore, is required to file its annual declaration by 31 December 2025, i.e. within nine months from the end of its Financial Year. Company E submits its annual declaration on 21 September 2025, which is within seven monthsfrom the end of the Tax Period, i.e. before 31 October 2025.

Since Company E submits its annual declaration within seven months from the end of its first Financial Year, the FTA waives the Late Registration Penalty of AED 10,000 in Company E’s EmaraTax Corporate Tax account.