In a landmark move to ease the financial burden on businesses, the UAE Ministry of Finance (MoF) and the Federal Tax Authority (FTA) have announced the waiver of administrative fines for companies that failed to register for corporate tax on time. This temporary relief is part of a broader initiative to support smooth onboarding during the country’s first year of corporate tax implementation.
Effective immediately, companies and certain exempt entities can avoid penalties if they file their corporate tax returns or annual declarations within seven months from the end of their first tax period, as stipulated under the UAE Corporate Tax Law.
The UAE introduced a standard corporate tax rate of 9% on taxable income exceeding Dh375,000, with implementation beginning for most entities in mid-2023 or early 2024, depending on their fiscal year. While many firms complied, a significant number missed the registration deadlines, prompting the authorities to intervene with this first-year grace measure.
The Cabinet-approved decision, announced on April 29, 2025, aims to reduce the financial and administrative pressures on businesses still adjusting to the new tax system. It applies to both companies subject to corporate tax and specific individuals or entities required to register with the FTA.
“The initiative enhances early compliance, supports businesses, and simplifies registration processes,” said an MoF spokesperson, emphasizing the government’s intent to promote a pro-business tax environment during this transitional phase.
Additionally, businesses that have already paid fines and meet the new criteria will be eligible for refunds, a move expected to further incentivize voluntary compliance.
This announcement reinforces the UAE’s position as a competitive and business-friendly economy. It also aligns with efforts to strengthen the country’s standing in global economic indicators by ensuring that legal compliance does not translate into punitive overheads during periods of policy shifts.
With the corporate tax framework still in its formative phase, the UAE government’s latest decision underscores its commitment to creating a compliant yet accommodating business landscape. Businesses now have a clear window of opportunity to meet their obligations without fear of fines, reinforcing a smoother transition into the tax era. Stakeholders are encouraged to take prompt action to benefit from this one-time relief and ensure full compliance moving forward. For updates on corporate tax regulations and deadlines, visit the Federal Tax Authority website.
