The UAE Federal Tax Authority (FTA) has introduced a significant incentive for businesses to complete their corporate tax registrations—even if deadlines were previously missed.
Since the corporate tax registration timelines were announced in February/March 2024, failing to register within the specified period has triggered an administrative penalty of AED 10,000.
To ease the compliance burden, the FTA launched a penalty waiver initiative in May. A detailed public clarification (CTP006) has since been released, outlining how the waiver works. Here are the key highlights:
Who Is Eligible for the Penalty Waiver?
The waiver isn’t limited to companies—it also covers individuals subject to corporate tax. The main eligibility condition is straightforward: the tax return must be submitted within seven months (rather than the usual nine months) from the end of the first tax period.
Initially, there was confusion in the business community, with many believing the return deadline was July 31. However, this applies only to entities with a January–December financial year. Those with an April–March fiscal year must file their returns by September 30.
Even businesses exempt from corporate tax—such as Qualifying Public Benefit Entities (QPBEs) and Qualifying Investment Funds (QIFs)—can benefit from the waiver, provided their annual declaration is filed within seven months from the close of their first financial year.
Do You Have to Pay Corporate Tax Within 7 Months Too?
One common question is whether corporate tax must also be paid within the shortened seven-month timeframe. The FTA has clarified that the payment deadline remains unchanged—tax is still due within nine months from the end of the tax period. The seven-month requirement applies only to return submission for waiver eligibility.
Is a Formal Waiver Application Required?
No formal application is needed. The waiver will be automatically granted once the return is submitted within the stipulated seven-month period. This applies even if the taxpayer had previously submitted a reconsideration request against the penalty.
For unpaid penalties, the AED 10,000 will be automatically waived on Emaratax. If the penalty has already been paid, the amount will be credited to the corporate tax account (not the VAT account), and businesses may choose to either use the credit toward future liabilities or request a refund.
New Companies Formed in 2025: What You Should Know
Companies established on or after March 1, 2024, must register for corporate tax within three months of incorporation. Many new businesses—including those formed in 2025—have been penalized for missing this window, often due to miscalculating the timeframe.
For example, a company incorporated on January 15, 2025, must register by April 15, 2025—not the end of April.
Encouragingly, the FTA’s clarification specifies that the waiver applies to the first tax period, whether past or future. This opens the door for newly formed companies to benefit from the initiative in 2026.
What If You Join a Corporate Tax Group?
If a business incurs a late registration penalty and later joins a corporate tax group, it can still benefit from the waiver. The condition is that the group’s tax return must be filed within seven months of the tax period’s end.
A Welcome Relief for Businesses
This initiative provides much-needed financial relief while promoting greater tax compliance. Businesses are encouraged to take full advantage of the waiver scheme by understanding the eligibility criteria and ensuring timely return submissions.
