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UAE Waived Corporate Tax Penalties for Late Registration in First Year
In a major relief for businesses, the UAE Ministry of Finance and the Federal Tax Authority (FTA) have announced that companies that missed their corporate tax registration deadline will not face penalties—if they meet certain conditions. This one-time initiative applies to the first year of corporate tax implementation and is designed to support businesses still adjusting to the new tax system.
What Is the Corporate Tax in the UAE?
Corporate tax is a new law introduced by the UAE that applies to business profits. It came into effect for most businesses from June 1, 2023. Under this law, companies with profits exceeding AED 375,000 are subject to a 9% corporate tax. Companies were required to register with the FTA before their first tax period ended—but many missed this deadline, either due to confusion or lack of awareness.
What Is the Penalty Waiver About?
Previously, missing the registration deadline would lead to administrative penalties. But under this new initiative launched on April 29, 2025, businesses that missed their corporate tax registration will now be exempt from late registration penalties—as long as they submit their tax return on time.
This is a key move to encourage voluntary compliance while giving businesses breathing room in their first year under the new tax law.
Who Can Benefit?
This initiative applies to a wide range of businesses and entities, including:
Companies registered in the UAE mainland
Businesses operating in UAE free zones
Small and Medium Enterprises (SMEs) and startups
Exempt entities, such as government-owned companies and qualifying investment funds
To qualify, these businesses must file their corporate tax return within 7 months from the end of their first tax period. For example, if a company’s first tax year ends on December 31, 2024, it must file its return no later than July 31, 2025 to benefit from the penalty waiver.
Will Previously Paid Penalties Be Refunded?
Yes. If a company already paid a fine for missing its registration deadline but still submits its tax return on time, the FTA has confirmed that the penalty amount will be refunded. This adds more value to the initiative by rewarding businesses that proactively comply now—even if they were late initially.
Why Is This Important?
This waiver shows that the UAE government is taking a supportive approach, especially during this transition phase. Corporate tax is new to the UAE, and many businesses—especially smaller ones—may not have been fully prepared. This move:
Reduces financial pressure on new and small businesses
Encourages proper filing and compliance
Avoids penalizing those still learning the new system
Promotes a more business-friendly environment
Compliance Still Matters
While the penalty waiver is a helpful step, it doesn’t mean that businesses can take compliance lightly. Filing your return on time is still mandatory. The waiver only applies to late registration penalties—not to late filing or other non-compliance issues. Businesses must still meet all filing deadlines, maintain proper records, and follow corporate tax rules.
To stay compliant, it’s important to keep your financial records in order. You can explore our accounting and bookkeeping services and VAT registration support to ensure you meet the requirements. For full support, our accounting services in Dubai can help simplify the process.
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What Should Businesses Do Now?
Businesses that missed the registration deadline should not panic. They should:
File their corporate tax return on time (within 7 months of their tax period end)
Keep accurate financial records and maintain proper bookkeeping
Reach out to tax advisors or business setup specialists if they’re unsure about the process
The UAE has made it clear that it wants businesses to succeed, and this initiative is a step toward that goal—but staying compliant is still key to long-term success.
How Can Choose UAE Help
At Choose UAE, we help businesses navigate the UAE’s corporate tax system with ease and confidence. Whether you missed your registration deadline or want to ensure your financials are in order before filing, our team can assist with accurate tax filings, bookkeeping, VAT registration, and more. We simplify compliance so you can focus on running your business. Get in touch with us today to get started.
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