The UAE’s corporate tax landscape has undergone significant changes in 2024, with businesses now required to register and comply with new tax obligations. For many companies, adjusting to these rules has been a challenge, especially with the possibility of incurring steep penalties for late registration. However, the UAE government has introduced a Corporate Tax Late Registration Penalty Waiver to help businesses ease into this new tax regime. This article will explain the waiver, how it works, and what businesses need to do to avoid penalties and ensure full compliance.
What Is the UAE Corporate Tax Late Registration Penalty Waiver?
In April 2025, the UAE government introduced a one-time Corporate Tax Penalty Waiver as part of its efforts to support businesses adapting to the new Corporate Tax Law. This waiver allows businesses to avoid the AED 10,000 late registration penalty if they meet specific filing requirements.
Who Is Eligible for the Corporate Tax Late Registration Penalty Waiver?
The penalty waiver applies to businesses and certain exempt entities that have missed the initial corporate tax registration deadline. To qualify for the waiver, businesses must:
- File their corporate tax return or annual statement within seven months of their first tax period’s end.
- This means if your fiscal year ended on December 31, 2024, you must submit your first tax return by July 31, 2025, to avoid penalties.
- The waiver applies to a wide range of businesses, including LLCs, private firms, free zone companies, and even certain exempt entities.
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Why Was the Corporate Tax Late Registration Penalty Waiver Introduced?
The introduction of corporate tax in the UAE has created significant compliance challenges for businesses, especially SMEs and startups. The AED 10,000 penalty for missing the registration deadline can be a financial burden, especially for smaller companies still navigating the tax system.
The waiver is designed to:
- Encourage early compliance with the new tax regulations.
- Reduce the financial strain on businesses, particularly small and medium-sized enterprises (SMEs).
- Promote a culture of tax transparency and help businesses adjust to the new rules.
- Align with global best practices and strengthen the UAE’s position as a business-friendly destination.
Read more: Small Business Relief Tax Framework in the UAE
How the UAE Corporate Tax Late Registration Penalty Waiver Works
The penalty waiver applies under the following conditions:
- First-time filers who have registered late for corporate tax but file within seven months of their tax period’s end.
- The AED 10,000 penalty will be automatically waived if businesses submit their first tax return within the given timeframe.
For businesses that have already paid the penalty for late registration, the penalty will be refunded if they file their returns on time.
Here is the official publication of UAE Ministry of Finance and Federal Tax Authority about the penalty waiver.
5 Common Scenarios Where the Penalty Waiver Applies
Scenario 1:
The taxpayer completed the registration process and was issued a penalty for late registration, which has not yet been paid. The taxpayer then submitted the tax return within seven (7) months from the end of the first tax period.
The individual will be exempted from the penalty.
Scenario 2:
The taxpayer completed the registration and was issued a penalty for late registration, which has not yet been paid. The taxpayer has not yet submitted the tax return for the first tax period.
In this case, the taxpayer must submit the tax return or the annual declaration within seven (7) months from the end of the first tax period, and the penalty will be waived.
Scenario 3:
The taxpayer completed the registration and was issued a penalty for late registration, which has already been paid. However, the tax return for the first tax period has not yet been submitted.
In this case, the taxpayer must submit the tax return or the annual declaration within seven (7) months from the end of the first tax period. the paid amount will be refunded to their tax account.
Scenario 4:
The taxpayer completed the registration, was issued a penalty for late registration, and has already paid the penalty. The taxpayer also submitted the tax return within seven (7) months from the end of the first tax period.
In this case, the amount paid will be refunded to their tax account.
Scenario 5:
The taxpayer has not submitted a corporate tax registration application.
In this case, the taxpayer must complete the registration and submit the tax return or the annual declaration within seven (7) months from the end of the first tax period. The penalty will be waived if it is imposed.
How to Claim the Corporate Tax Late Registration Penalty Waiver
To take advantage of the penalty waiver, businesses must:
- Register for corporate tax via the official EmaraTax platform.
- File your tax return within seven months of your first tax period’s end.
- Ensure that all financial records are accurate and up-to-date, in line with International Financial Reporting Standards (IFRS).
- If applicable, apply for a penalty refund via EmaraTax by submitting proof of timely filing.
Read More: Check Corporate Tax Deadline
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The Bigger Picture: UAE’s Long-Term Tax Goals
The penalty waiver is part of a broader strategy to strengthen the UAE’s global tax system and ensure a smooth transition to the new corporate tax regime. By supporting businesses during this critical phase, the UAE government aims to:
- Boost the country’s competitiveness.
- Encourage tax compliance and transparency.
- Build trust in the UAE’s tax system, positioning the country as a top global business hub.
Conclusion: Stay Compliant and Save on Penalties
The Corporate Tax Late Registration Penalty Waiver provides businesses with an excellent opportunity to avoid penalties and stay compliant with the UAE’s new corporate tax law. By submitting your tax return or annual financial statement within the seven-month grace period, you can avoid the AED 10,000 penalty and even secure a refund if you’ve already paid it.
To ensure compliance, use the EmaraTax platform to register, file, and manage your tax obligations. This waiver offers much-needed relief for businesses, especially SMEs, as they adjust to the new tax regime.
Disclaimer: This publication is for informational purposes only and should not be considered professional or legal advice. While we strive for accuracy, we make no guarantees regarding completeness or applicability. mazeed, its members, employees, and agents do not accept or assume any liability, responsibility, or duty of care for any actions taken or decisions made based on this content. For official tax guidance, please refer to the UAE Ministry of Finance and the Federal Tax Authority.
