Corporate Tax Case Study: Late Filing Leads to Penalties
Before starting the article, please note that the company name used in this example is fictional and is provided for illustrative purposes only.
With the UAE Corporate Tax Law now in full effect, the filing of Corporate Tax return within the prescribed timeframe and clearing the tax payment, as well as becoming the financial and legal obligations for all the taxable persons. In this case study, let us explore how a Dubai-based services company was impacted due to their missing deadline for Corporate Tax filing and which resulted the consequences of administrative penalties.
Background of the Company
➤ Company Name: Horizon Consulting LLC
➤ Entity Type: Limited Liability Company (LLC)
➤ Location: Dubai Mainland
➤ Financial Year: 1 January 2024 to 31 December 2024
➤ Activity: Management Consulting
➤ Annual Revenue (FY 2024): AED 4.2 million
Horizon Consulting LLC is a professional services firm that provides strategic consulting to SMEs in the UAE. The company is VAT-registered and has three shareholders. It operates under a standard calendar-year financial period. Horizon Consulting LLC is a management consultancy firm catering to SMEs in the UAE with strategic advisory and consulting. The company has 2 shareholders and is registered and has obtained the Tax Registration Number (TRN) for VAT purposes. The financial year of the company is the calendar year and is registered for Corporate Tax. The Corporate Tax TRN Certificate states that the company is subject to Corporate Tax with effect from 01 January 2024.
Timeline of Events
➜ 31 December 2024: End of first tax period.
➜ Early January 2025: The Finance team begins the closing of the books and finalising the financial statements.
➜ March 2025: External audit started, but due to incomplete documentation, the audit process was delayed.
➜ 30 September 2025: The first tax period ended on 31 December 2024, and the obligation to file the Corporate Tax return is within 9 months from the end of the first tax period.
➜ 10 October 2025: Horizon Consulting LLC realises that the Corporate Tax return was not submitted on time.
Legal Framework: Filing Obligations
- The Corporate Tax return must be filed and payments are required to be made, if any, within 9 months from the end of the tax period.
- Submit the Corporate Tax return through the online platform of FTA, which is the EmaraTax Platform.
FTA Corporate Tax Returns Guide (CTGTXR1) also clarifies:
- Every entity is obligated to file one tax return for one tax period.
- Return must disclose the necessary details as per the Corporate Tax Law like accounting profit, adjustments, and taxable income.
- 9-month deadline is not only for filing, it is also for clearing the tax dues, if any.
What Went Wrong?
Horizon Consulting LLC:
- Missed to monitor the deadline for Corporate Tax return filing.
- Assumed audit delay would justify the delay in submission of Corporate Tax return.
The missed deadline resulted non-compliance under the UAE Corporate Tax law, leading to administrative penalties.
Penalty Overview
The administrative penalties are specified in the Tax Procedure Law which are as below;
- AED 500 per month from the date of missing the filing for the first 12 months. From 13th month onwards AED 1000 per month is administrative penalty is applicable.
- Unpaid Corporate Tax interest is applicable at 14% per annum.
In addition:
- Repeated delays may affect the company's tax compliance rating
- FTA may require additional scrutiny or justification in subsequent filings
Rectification and Compliance Measures
Upon discovering the missed deadline, Horizon Consulting:
- Immediately prepared the Corporate Tax return and submitted through EmaraTax Platform.
- Paid and settled the administrative penalties for delay in submission of Corporate Tax return.
- It was a missing deadline and no intent of tax evasion, the company filed a waiver request to cancel the penalty.
- Implemented internal compliance calendars and automated alerts for future filings
Key Take aways
1. Regardless of the profit of the company or tax amount due, every taxable person must file a Corporate Tax return.
2. The return deadline is fixed: The reporting is required to be done within 9 months from the end of each tax year.
3. Statutory deadlines missing cannot be justified with the internal procedures like audits.
4. Penalties are likely to be strict and cumulative, especially in repeat cases.
Compliance Tips for UAE Businesses
- Prepare and maintain a compliance calendar for all the tax filings and other regulatory requirements.
- Finalize the books and make sure all support documents and ready for audit.
- Initiate the audit process well in advance of the Corporate Tax filing deadline.
- Appoint a Tax Agent to manage submissions.
- Educate internal teams on the non-negotiable timelines under UAE tax law.
How Flyingcolour® Can Help?
At Flyingcolour Tax Consultant, we support businesses in:
- Maintaining the compliance calendar for businesses with timely reminders.
- Prepare the accurate tax return and submission through the FTA's Tax portal.
- Reviewing tax computations and financial disclosures
- Submitting penalty waivers or Voluntary Disclosures where applicable
- Setting up internal tax compliance frameworks for long-term assurance.
To learn more about Corporate Tax Case Study: Avoid Late Filing in the UAE, book a free consultation with one of the Flyingcolour team advisors.
Disclaimer: The information provided in this blog is based on our understanding of current tax laws and regulations. It is intended for general informational purposes only and does not constitute professional tax advice, consultation, or representation. The author and publisher are not responsible for any errors or omissions, or for any actions taken based on the information contained in this blog.