In a major relief for businesses, the United Arab Emirates’ Federal Tax Authority (FTA) has started implementing a new Cabinet Decision to waive administrative penalties for companies that failed to register for corporate tax on time—provided they meet certain conditions. This move is designed to support voluntary compliance and simplify the country’s evolving tax system.
What’s Changing?
The FTA announced on May 7 that businesses and certain exempt entities that missed the corporate tax registration deadline will no longer face penalties, as long as they submit their tax returns or annual declarations within seven months of the end of their first financial year. This update only applies to the first tax period and will not be extended to subsequent years.
“This exemption aligns with the UAE’s strategy of promoting economic growth through streamlined tax procedures,” said Khalid Ali Al Bustani, Director-General of the FTA.
Previously, administrative fines were imposed for delays in registration or filing. Now, even companies that have already paid such penalties can receive refunds, credited directly to their tax accounts—provided they meet the seven-month filing condition.
Who Benefits from the Waiver?
The waiver applies broadly to:
- Businesses that registered late and were fined.
- Businesses that paid the late registration fine but submit returns within seven months.
- Businesses that haven’t registered yet but complete both registration and return filing within the same seven-month window.
This relief also extends to exempt organizations that are legally required to register under the Corporate Tax Law.
More than 543,000 businesses registered for corporate tax in the first quarter of 2025, demonstrating growing engagement with the new system. The FTA emphasized its continued commitment to raising awareness through outreach and education initiatives.
“The FTA remains committed to transparency and flexibility in our tax framework, encouraging businesses to comply voluntarily,” added Al Bustani.
The standard corporate tax in the UAE stands at 9% for taxable income exceeding AED 375,000. The penalty waiver initiative is part of broader efforts to make tax compliance easier for the UAE’s growing business sector.
Act Fast: The Deadline Is Key
The FTA is urging companies to act promptly. All registrations and returns must be filed via the EmaraTax platform. Missing the seven-month deadline could mean forfeiting the penalty exemption and facing fines again
The FTA’s decision marks a significant step in easing the transition to the UAE’s new corporate tax system. By waiving penalties for late registration, the authority is not only encouraging compliance but also reinforcing trust and transparency in the tax process. Businesses that act within the grace period stand to benefit financially and avoid future complications.
