Corporate Tax Fines and Penalties in UAE

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Corporate Tax Penalties in UAE 2024

The Ministry of Finance introduced new Corporate Tax Fines and Penalties in UAE on 27 February 2024.  These penalties and fines are announced for those registering for corporate taxes after the designated deadline. These penalties and fines primarily aim to encourage taxpayers to adhere to the tax regulations and register before the deadline. The fines or penalties for late corporate tax registration align with the penalties for excise tax and Value Added Tax registration.

Companies in the United Arab Emirates must adhere to corporate tax laws to avoid corporate tax fines and penalties. All companies, including Mainland and Free Zones, must apply for corporate tax registration and make timely payments to avoid penalties set by the Ministry of Finance.

If you want to know all the information about Corporate Tax  Penalties in UAE you must read this article. In this article, we will provide you with a detailed guide about these penalties in the United Arab Emirates.

Corporate Tax Penalties in UAE

Penalties for UAE Corporate Tax – Overview

On June 1, 2023, the United Arab Emirates implemented corporate tax. Most businesses are ready to deal with this change. If anyone does not follow the regulations of the Federal Tax Authorities (FDA) and the Ministry of Finance, they must submit fines and penalties.

For this case, the UAE has issued Cabinet Decision No. (75) of 2023, which is essential for outlining administrative penalties for violations of Federal Decree Law No. 47 of 2022 on the taxation of businesses and corporations.

A robust component of the legislation that deals with enforcing the administrative penalties for the violation of Federal Decree-Law No. (47) of 2022 is the Cabinet Decision No. (75) of 2023. The overall choice has become essential as the United Arab Emirates has already implemented corporate tax in order to encourage tax compliance among businesses and organizations.

The Ministry of Finance has also announced Cabinet Decision No. 10 of 2024,  amending the schedule of violation for corporate tax laws and administrative penalties of Cabinet Decision No. 75 of 2023 on the administration penalties of Federal Decree-Law No. 47 of 2022 on the taxation of companies and organization.

The Cabinet Decision No. 10 of 2024 came into effect on 1st March 2024. The new Corporate Tax  Penalties in UAE were introduced to motivate taxpayers in this country to comply with tax regulations by registering for corporate tax in a timely manner.

Details about the Corporate Tax Fines and Penalties in UAE

The Federal Tax Authority and Ministry of Finance in the UAE have announced several Corporate Tax Fines and Penalties in UAEIf a taxable person fails to pay the corporate tax return on time or violates any rules, they must pay penalties or fines. The following is the list of the Corporate Tax Fines and Penalties in UAE:

 

  1. Late Corporate Tax Registration fines – AED 10000*
  2. Late deregistration fine – Late submission incurs an AED 1,000 penalty, enhancing by AED 1,000 monthly, up to at least AED 10,000.
  3. Late Corporate Tax Return Submission fine:
  • AED 500 monthly for the first twelve months.
  • AED 1,000 monthly from the thirteenth month onwards, beginning the day after the Tax.
  1. Penalties apply if records and information needed by the corporate tax law cannot be kept up to date:
  • AED 10,000 for each infraction.
  • AED 20,000 for repeated offenses committed within twenty-four months of the previous violation.
  1. Unsettled Payable Corporate Tax Fine:
  • 14% per annum or annually on unsettled Payable Tax, applied per month from the day after the due date of payment.
  • Payment for Due date for Voluntary Disclosure: 20 Business Days from submission.
  • For Tax Assessment: 20 Working Days from receipt.
  1. If you cannot facilitate the Tax Auditor during a Tax Audits: AED 20,000*
  2. Incorrect Corporate Tax Return submission: AED 500 unless the taxable Person corrects the Tax Return before the deadline according to the Corporate Tax Law.
  3.  Late payment of a Corporate Tax Declaration to the relevant Authority
  • First 12 months: AED 500 per month
  • After the 12th month onwards: AED 1,000 per month.
  1. If you did not submit the required documents, records, or data in the Arabic language when required:  AED 5000*

Corporate Tax Penalties in UAE

Corporate tax fines for late registration

Every company must register for corporate tax and acquire the registration number. During the registration, you must submit the required documents for the Corporate tax. If you cannot or cause delays in the registration, you must impose the huge fines mentioned above.

 

Penalties for late payment of corporate tax

As mentioned above, the late payment of corporate tax will be subject to the Corporate Tax  Penalties in UAE. The following are the techniques commonly used to find out the late payment penalty for corporate tax in the UAE:

  • A fixed penalty is applied for the first month. The fixed penalty is mentioned above.
  • Each additional month’s delay carries a further fixed penalty.
  • Beginning from the due date and continuing until the complete amount is paid, interest will be imposed on the amount of overdue tax.

To prevent financial hardship and keep a good reputation, it is crucial to comply with the tax laws and instantly pay tax responsibilities.

 

Corporate Tax Penalties For Late Return Filing

Corporate Tax penalties for late return submission may be very high. In the case outlined, where a company’s fiscal year ends in April, and the tax return filing due is on the 15th day or date of March, failing to abide by federal decree laws or filing tax returns after the deadline may lead to substantial fines in Dirhams that mentioned above.

 

How should you prevent corporate tax penalties and fines?

Businesses and companies subject to the corporate tax law must ensure compliance with the regulations and requirements to avoid incurring these administrative penalties. In addition, they should stay informed about changes and updates to maintain their financial health and legal standing.

 

How can Flyingcolour Tax Consultant help you?

Flyingcolour Tax Consultant provides excellent tax consultant services to its clients. Our experts can help you to prevent penalties or fines for Corporate Tax in the UAE. In addition, we can help you to register, file, and pay corporate tax to the relevant authority.

To learn more about the Corporate Tax Fines and Penalties in UAE, book a free consultation with one of the Flyingcolour team advisors, simply call +971 50 5585305 or send WhatsApp messages to +971 4 4542366. you can also drop an email to info (at) flyingcolour (dot) com.

This article was published on 26-03-2024. The information provided in the article is based on the policies and rules applicable at the time of writing it. Talk to one of our consultants for any recent updates or changes

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