UAE Corporation Tax Penalties: A Complete Guide to Penalties, Late Filing Fees and Compliance in 2026
The UAE added corporation tax in June 2023, applying a 9% tax rate on taxable profits above AED 375,000. Since then, companies across the United States have adapted to new compliance requirements of record-keeping, tax filing, and well-timed payment of taxes.
With the primary corporate tax filing season for the 2024 tax year underway, many companies are finding that scrutiny extends far beyond the reality of obtaining a tax registration number. Missing deadlines or failing to meet Federal Tax Authority (FTA) requirements can result in significant financial penalties.
Do you realise that actually forgetting to file corporation tax on time can cost your business AED 10,000?
The AED 10,000 late filing penalty applies to accounts as of March 2024. However, to help businesses during the transition period, the FTA released a penalty waiver measure in April 2025 that allows eligible taxpayers to avoid the higher penalty for late filing if they meet a condition.
The federal tax authority has also implemented clean rules on late filing penalties, behind-the-scenes tax payments, false tax statistics, and other violations of noncompliance. In some cases, companies can additionally face standard administrative penalties of up to 14% annually of unpaid taxes.
In this booklet, we break down the main consequences of corporate tax in the UAE, explain how their penalties are calculated, discuss state-of-the-art options for obtaining a waiver of penalties, and provide sensible steps that companies can take to stay compliant and avoid pointless expenses.
Legal Framework Governing UAE Corporate Tax Penalties
All UAE corporate tax penalties, administrative penalties and compliance obligations are governed through a set of key tax rules issued through the UAE authorities and enforced through the Federal Tax Authority (FTA):
Federal Decree Act No. 47 of 2022: Establishes the corporate tax regime in the UAE and outlines the obligations of taxpayers.
Government Decision no. 75 of 2023: Provides applicable administrative penalties for violations of tax laws and supervisory requirements.
Ministerial Decision no. 114 of 2023: Provides uniform rationalisation on corporate tax management, processes and administration.
Government Decision no. 10 of 2024: Introduces an administrative penalty of AED 10,000 for failure to audit corporation tax by the
prescribed cutoff date, effective 1. March 2024 This is one of the largest corporate tax measures added to date, and although it has a direct impact on organisations operating within the UAE, it has not been greatly noticed in competitor content.
Together, those rules outline taxpayers’ responsibilities, establish filing and filing requirements, and describe the economic consequences of non-compliance, including late filing, incorrect tax filings, and unpaid tax liabilities.
Fines and Penalties under UAE Corporate Tax
I. Failure in Records Keeping & Compliance
1. Failure to Keep Records
When it triggers: In case the Taxable Person fails to maintain or keep the mandatory accounting records, supporting documents, and information as per UAE tax law.
Responsible Person: Taxable Person.
Penalty Amount:
- AED 10,000 for each violation
- AED 20,000 for a repeat offence within 24 months
Penalty Type: Fixed & Repeated
2. Language Violation
When it triggers: In case the Company does not submit tax records, documents, or data in Arabic language upon request from the FTA.
Responsible Person: Person conducting business/person with a tax obligation.
Penalty Amount: AED 5,000 for each violation
Penalty Type: Fixed
3. Failure to Facilitate Tax Audit
When it triggers: In case a representative person, tax agent, or legal representative fails to provide the necessary support or access to the FTA during an audit under UAE CT Law.
Responsible Person: Person, Tax Agent, or Legal Representative.
Penalty Amount: AED 20,000 for each violation
Penalty Type: Fixed
4. Failure to Update Business Information
When it triggers: In case the registrant (Taxable Person) fails to notify the FTA of any major change in their business information (e.g., trade license details, address, and ownership structure).
Responsible Person: Registrant / Taxable Person.
Penalty Amount:
- AED 1,000 for each violation
- AED 5,000 for a repeat offence within 24 months
Penalty Type: Fixed & Repeated
5. Legal Representative – Failure to Notify Appointment
When it triggers: In case the legal representative of the Taxable Person does not inform the FTA of their appointment within the specified timeline.
Responsible Person: Legal Representative (from own fund)
Penalty Amount: AED 1,000
Penalty Type: Fixed
II. Delay in Filing & Declaration
1. Late Tax Return Submission
When it triggers: In case the Taxable Person fails to file a tax return within 9 months from the last day of the end of the financial year.
Responsible Person: Taxable Person.
Penalty Amount:
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AED 500 per month for the first 12 months
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AED 1,000 per month from the 13th month onward
Penalty Type: Monthly Accumulative
2. Late Declaration Submission
When it triggers: In case a Taxable Person fails to file any required declaration, e.g, for qualifying income or non-taxable person registration.
Responsible Person: Taxable Person.
Penalty Amount:
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AED 500 per month in the first 12 months
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AED 1,000 per month from the 13th month onward
Penalty Type: Monthly Accumulative
3. Late Deregistration
When it triggers: When a registrant Taxable Person fails to apply for deregistration within 3 months from the date they cease conducting business, or no longer meet the conditions that make them subject to Corporate Tax, for example, if the company is liquidated or permanently closed.
Responsible Person: Registrant Taxable Person.
Penalty Amount: AED 1,000 per month up to a maximum of AED 10,000
Penalty Type: Monthly Accumulative
4. Legal Representative – Late Filing
When it triggers: Where the legal representative fails to file the tax return within 9 months from the last day of the financial year. Note: penalty is payable from the legal representative’s own funds.
Responsible Person: Legal Representative.
Penalty Amount:
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AED 500 per month for the first 12 months
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AED 1,000 per month from the 13th month onward
Penalty Type: Monthly Accumulative till continuation in default
III. Errors & Failure in Timely Payment
1. Incorrect Tax Return
When it triggers: In case an incorrect tax return is submitted, and the error is not corrected before the filing deadline, i.e. 9 months from the end of the financial year.
Responsible Person: Taxable Person.
Penalty Amount: AED 500
Penalty Type: Fixed
2. Late Payment of Tax
When it triggers: In case the due tax amount is not paid within the 9 months from the end of the financial year.
Responsible Person: Taxable Person.
Penalty Amount:
14% per annum charged monthly on the unpaid tax amount.
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For tax returns, counted from the day after the due date.
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For voluntary disclosures or tax assessments: counted from 20 business days after submission or receipt.
Penalty Type: Monthly (Interest-based)
3. Voluntary Disclosure (Late Correction)
When it triggers: where the Taxable Person files a voluntary disclosure to correct errors in a previously submitted tax return, assessment, or refund application.
Responsible Person: Taxable Person.
Penalty Amount: 1% per month on the tax difference from the original due date until the voluntary disclosure is submitted.
Penalty Type: Monthly Interest-based
4. Non-Disclosure Before Audit (Pre-Audit Violation)
When it triggers: where the Taxable Person fails to voluntarily disclose errors before being notified of a tax audit by the FTA.
Responsible Person: Taxable Person.
Penalty Amount:
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Fixed: 15% of the tax difference
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Monthly: 1% per month on the tax difference until the FTA issues a tax assessment
Penalty Type: Fixed + Monthly Interest-based
How does Flyingcolour Tax and Consultant help you?
At Flying Colour Tax Consultant LLC, we help our clients in,
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Timely Registration for Corporate Tax and obtain their TRN
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File timely and accurate Corporate Tax returns
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Prepare for FTA audits and compliance checks with records and supporting documents
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Guiding on voluntary disclosures and penalty reviews
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Assistance in setting up accounting systems aligned with FTA requirements
FAQ
1. What is the penalty for overpaid corporate tax filing within the UAE?
Businesses that fail to register for corporate tax in the UAE by the stipulated closing date may face an administrative penalty of AED 10,000 under Cabinet Decree no. 10 of 2024, which is valid from 1 March 2024 .
2. Can the AED 10,000 corporate tax filing penalty be avoided?
Indeed. The UAE government approved a penalty waiver initiative in April 2025, which allows eligible companies to request relief from the AED 10,000 overdue registration penalty if they meet the required conditions and file their corporate tax returns within the required timeframe.
3. When will the UAE corporation tax go back?
In general, a corporation tax return must be filed within 9 months of the end of the current financial year. For example, if a business has a cash 12-month grace period ending on December 31, 2024, the refund must be paid through September 30, 2025.
4. What is the penalty for going back to late corporate tax?
The penalty for late filing of a corporation tax return is:
- AED 500 per month for the first twelve months.
- 1,000 AED per month from 13 months.
The penalty continues to build until a go back is inserted.
5. How expensive is an FTA on unpaid corporation tax?
The federal tax authority charges an annual progressive contribution of 14%, calculated month by month, on any unpaid corporate tax amount. The interest accrues from the day after the due date and continues until the outstanding amount is paid in full.
6. How long can I retain accounting facts for the corporate tax function?
According to the UAE Corporate Tax Law, entities must retain accounting facts, invoices, contracts, financial institution statements and accompanying records for at least 7 years Failure to maintain accurate data may result in publicity .
To learn more about UAE Corporate Tax Penalties & Fines 2026: Complete Guide for Every Business, 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.