How to Claim the UAE Corporate Tax Late Registration Waiver
Have you been imposed an AED 10,000 penalty for missing the deadline for corporate tax registration? Here is the good news for you. UAE Ministry of Finance and Federal Tax Authority has taken a positive initiative to support the businesses which a chance to waive the penalty imposed.
If you are already registered and the penalty is imposed, or if you have not registered but as of the date you are late for registering and obtaining the Tax Registration Number (TRN) under Corporate Tax, you can be eligible for the penalty exemption through the new announcement. The Corporate Tax late registration penalty exemption can be availed, subject to satisfying the condition that taxpayers are submitting the Corporate Tax return within 7 months from the end of the first tax period.
Corporate Tax registration deadline
Through FTA Decision No.3 of 2024, followed by the Public Clarification, FTA had outlined the deadlines for taxable persons. For any new companies registered after 01 March 2024, the deadline to register is within 3 months from the date of incorporation. For any licenses issued prior to 01 March 2024, the deadline was determined based on the month of license issued and a detailed table was published with the deadline starting from 31 May 2024 to 31 December 2024.
Administrative Penalty for late Corporate Tax registration
Ministry of Finance, through Cabinet Decision No.10 of 2024 and the Federal Tax Authority (FTA) through FTA Decision No.3 of 2024, published the administrative penalty for late application for registration under UAE Corporate Tax. The administrative penalty specified is AED 10,000 for late registration. Many business owners missed the deadline for registration of Corporate Tax, which imposed an administrative penalty of AED 10,000. There are many taxpayers who paid the penalty, and others have not yet settled the penalty.
Corporate Tax late registration penalty waiver announcement
On 29 April 2025, the Ministry of Finance and the Federal Tax Authority announced a waiver of the late registration penalty, subject to satisfying below conditions;
- A taxable person must submit the first Corporate Tax return within 7 months from the end of the first tax period.
- An exempt person must submit the annual declaration within 7 months from the end of the first tax period.
Questions from those penalised
- Is this penalty waiver only for companies or individuals who are required to register and have also been delayed?
- Is there any application to submit to the Federal Tax Authority to get the late Corporate Tax registration waiver?
- Will FTA refund if the penalty is already paid?
- The penalty exemption is only for those already registered, or if I register now, will the penalty be waived off?
Clarifications from the Federal Tax Authority
FTA has published the clarifications for the eligibility for penalty exemption. Certain scenarios are explained who are eligible for penalty waiver, which are as below;
|
Scenarios
|
Corporate Tax Registration Status |
Corporate Tax filing done within 7 months from the end of the first tax period |
Penalty Imposed as of the Date |
Penalty Payment done to FTA |
Penalty Waiver status |
|
1 |
Registered |
Filed |
Yes |
No |
Eligible |
|
2 |
Registered |
Not filed |
Yes |
No |
Eligible subject to the tax filing within 7 months from the end of the tax period. |
|
3 |
Registered |
Not filed |
Yes |
Yes |
Eligible if the filing is done in 7 months and the penalty is paid, it will be credited to the tax account |
|
4 |
Registered |
File |
Yes |
Yes |
Eligible and penalty paid will be refunded to the tax account |
|
5 |
Not registered |
Not filed |
No |
No |
Eligible if the taxpayer registers and files the return within 7 months |
How to determine the tax period and calculate 7 months?
The tax period is basically the financial year of the company. For a natural person tax period is always a calendar year. For Companies, it can change depending on the financial year followed by the entity.
Example 1:- If a company whose financial year is January to December, the first tax period ends on 31st December 2024. Their deadline to file the Corporate Tax return to get penalty exemption is 31 July 2025.
Example 2:- If a company whose financial year April to March, its first tax period ends on 31st March 2025. Their deadline to file the Corporate Tax return to get penalty exemption is 31 October 2025.
Conclusion
It is a great opportunity which owners must use to use and get the penalty waiver. The only compliance that FTA demands is to register, if you are not registered so far, and file the tax return within 7 months from the end of the first tax period.
Why Flying Colour Tax Consultant LLC?
Flying Colour Tax Consultant LLC is a FTA-approved Tax Agency (TAN: 30008296) with extensive experience in handling various tax matters in the UAE. We are specialists in tax compliance, international taxation, tax optimisation, etc. Our experienced team can handle your Corporate Tax matters using the knowledge and expertise of tax advisors and agents.
To learn more about UAE Corporate Tax Late Registration Penalty Waiver, 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.