UAE Offers Relief: Penalty Waiver for Late Corporate Tax Registration

The UAE’s Federal Tax Authority (FTA) has rolled out a timely initiative for 2025 – a penalty waiver scheme for late corporate tax registration. This comes as part of the government’s efforts to ease the transition into the newly implemented corporate tax regime, especially for small and medium-sized enterprises (SMEs) that may have missed their initial deadlines.

If your business hasn’t registered yet or has already paid a penalty for registering late, this is your chance to avoid or even recover those fines.

Read on to understand how your business can benefit.

A Quick Overview of UAE Corporate Tax

In 2024, the UAE introduced a federal corporate tax system. Businesses generating profits over AED 375,000 annually are now subject to a 9% corporate tax rate.

This move aligns the UAE with global tax standards and supports economic diversification. However, with the new law came the obligation to register for Corporate Tax, file returns, and remain compliant with FTA regulations.

When Should a Business Register for Corporate Tax?

Every business must register for Corporate Tax through the FTA’s EmaraTax portal. The deadline varies depending on the end date of the business’s financial year.

• If your financial year ends on 31 December 2024, you must submit your Corporate Tax Return by 30 September 2025.
• However, to qualify for the new penalty waiver, you must file the return or annual declaration by 31 July 2025, which is 7 months after your tax period ends.

Consequences of Missing the Registration Deadline

Until now, failure to register on time could result in a penalty of AED 10,000. Repeat offenses could lead to fines of AED 20,000 or more, creating financial pressure – especially for newer or smaller businesses.

Understanding the Late Corporate Tax Registration Penalty Waiver

To encourage voluntary compliance and support businesses in their transition, the FTA has launched a penalty waiver initiative in 2025.

What does it include?

• Waiver of AED 10,000 penalty for late registration.
• Refunds for penalties already paid, if businesses meet the new conditions.
• Applies to both taxable and exempt entities.
• The waiver is valid for a limited time and tied to your first tax return deadline. Most importantly, businesses must submit their return or declaration within 7 months of the end of their first tax period to qualify.

How Does This Benefit Businesses in the UAE?

This penalty waiver initiative provides meaningful support to companies adjusting to the UAE’s corporate tax framework:

• Avoid or Recover Penalties
  Businesses can avoid fines of up to AED 10,000 for late corporate tax registration – or even get refunded if the penalty was already paid. This is a major relief for companies that missed earlier deadlines.
• Improved Cash Flow for SMEs
  By eliminating unexpected penalties, businesses – especially startups and SMEs – can maintain better cash flow and direct their resources toward growth rather than compliance costs.
• Encourages Timely Filing
  The waiver motivates companies to file on time, fostering a habit of disciplined tax planning and financial accuracy, which is essential under the new tax regime.
• Simplifies Compliance Without Pressure
  By removing the fear of penalties, businesses are more likely to engage positively with the tax system, making it easier to stay legally compliant without added stress.

Who Benefits from the Waiver?

Here are the different scenarios where businesses can benefit from the waiver – if they file within 7 months of the end of their first tax period or financial year:

UAE Corporate Tax Penalty Waiver Scenarios

Scenario 1: Registered Late, Penalty Issued but Not Paid

Action: File your first Corporate Tax return or annual declaration via EmaraTax within 7 months.
Outcome: The penalty is completely waived.

Scenario 2: Registered Late, Penalty Issued, Return Not Yet Filed

Action: Submit the return or declaration within the 7-month deadline.
Outcome: The penalty is waived, even if it’s not yet paid.

Scenario 3: Registered Late, Penalty Paid, Return Not Yet Filed

Action: File your return/declaration within the 7-month window.
Outcome: The amount already paid is refunded to your FTA tax account.

Scenario 4: Registered Late, Penalty Paid, Return Filed on Time

Action: File the return within 7 months (even if you’ve already filed and paid the penalty).
Outcome: The penalty is refunded, as long as both the payment and filing conditions are met.

Scenario 5: Not Yet Registered

Action: Register for Corporate Tax and file your return or declaration via EmaraTax within 7 months.
Outcome: Any penalty (if imposed) is waived, or not applied at all if conditions are met.

Do Exempt Entities Also Qualify?

Yes. Entities that are exempt from corporate tax (like certain free‎zone companies or qualifying public benefit organizations) must submit their annual declaration within 7 months of their financial year-end. If they do, any late‎registration penalties are also waived.

How to Qualify for the Waiver?

To benefit from the waiver, businesses must:

• Submit their Corporate Tax Return or Annual Declaration within 7 months from the end of their first tax period.
• Ensure all information is correct and submitted through the FTA’s official EmaraTax system.
• Maintain up-to-date records and compliance documentation.

This waiver is open to:

• Taxable entities
• Exempt entities (e.g., public interest entities, qualifying free zone companies)

How to Avail the Waiver?

Here’s a step-by-step process:

1. Check your tax period end date.
   Example: If it ends on 31 Dec 2024, your return deadline for the waiver is 31 July 2025.
2. Log into the EmaraTax Portal.
3. Register for Corporate Tax (if not already done).
4. Submit your Corporate Tax Return or Declaration before the deadline.
5. If you’ve already paid a penalty, a refund will be issued to your FTA tax account once you meet the filing condition.

Conclusion

The UAE’s 2025 penalty waiver initiative is a welcome relief for businesses navigating the newly introduced Corporate Tax system. Whether you’ve registered late, missed the deadline altogether, or already paid penalties – there’s still a chance to avoid or recover fines.

The clock is ticking. Businesses with a financial year ending 31 December 2024 must act before 31 July 2025 to benefit from this opportunity.

Let Miqat Help You File on Time – and Save

At Miqat Chartered Accountants, we specialize in tax compliance, corporate registration in the UAE, and penalty resolution. Our experts ensure your Corporate Tax registration and filing are completed accurately and on time – so you can qualify for the waiver with zero hassle.

👉 Call / WhatsApp: +971 54 583 0947
👉 Visit: www.miqatca.com