Important Update for UAE Business: UAE Grants Penalty Waiver for Late Corporate Tax Registration

The UAE Federal Tax Authority have announced a penalty waiver for late corporate tax registration. Corporate taxpayers in the UAE who failed to register corporate tax on time will benefit from this penalty waiver as part of ongoing efforts to strengthen tax compliance.

Many businesses in UAE which missed the registration deadline faced a hefty penalty of AED 10,000. As part of initiatives, the UAE government implemented a one-time UAE FTA penalty waiver, allowing businesses in the UAE to complete corporate tax registration and avoid penalties.

We explore the UAE’s updated corporate tax policy in this blog, showing how businesses can avoid penalties and ensure proper registration.

A Look at the UAE Corporate Tax Framework

The implementation of the UAE corporate tax framework aims to expand revenue resources and lessen its dependence on oil revenue, and ensure a sustainable fiscal future. The standard rate of 9% for businesses earning taxable income over AED 375,000 is aimed at boosting the UAE’s global economic status.

Adjusting to the new tax system may feel confusing for some businesses. Businesses such as small companies can find it challenging while dealing with UAE corporate tax registration, return filing, and compliance, resulting in missed deadlines and hefty penalties.

Missed the Corporate Tax Deadline: A Guide to Corporate Tax Registration and Penalties in the UAE

Failure to register corporate tax in Dubai before the deadline can lead to a steep penalty of AED 10,000. This fines had become a major concern for businesses still catching up with new compliance requirements.

Corporate Tax Penalty Waiver UAE Explained

In the effort to ease the new tax system, the UAE FTA has introduced a limited-time Corporate Tax Penalty Waiver in May 2025. This initiative allows qualifying business to have the penalty of AED 10000 for delayed corporate tax registration in Dubai, UAE reversed.

Eligibility criteria for UAE Corporate tax Penalty Waiver:

To take advantage of the FTA penalty waiver, businesses must meet these criteria:

• Early UAE corporate tax return submission: To qualify, businesses must submit their corporate tax returns or annual statements within seven months of the end of their first tax period.
• Exempt Entities: Exempt entities must submit their annual declaration within seven months after the end of their first financial year to meet the criteria for the UAE FTA penalty waiver.

The UAE corporate tax penalty waiver applies to:

• All taxable businesses (LLCs, private firms, etc).
• Exempt entities such as public benefit groups and investment funds
• Any business or exempt entity that is registered for corporate tax, regardless of size or startup stage

Reason for the Implementation of the UAE Corporate Tax Penalty Waiver

To facilitate the transition for businesses to the UAE’s corporate tax system, the UAE FTA introduced the corporate tax penalty waiver as a strategic support tool.

The key objectives are:

• Supports businesses to adapt to new tax laws
• Ensure the business complies with the UAE corporate tax law by registering in a timely manner
• Provides sufficient time to get familiar with the Emaratax portal
• Display the ongoing commitment to businesses in the UAE.

The Perks of Timely UAE Corporate Tax Return Filing

Filing a UAE corporate tax return on time means businesses no need to pay penalties and those businesses which already paid the penalty can get a refund of the same, reducing financial stress and ensuring smoother transition into the new corporate tax system.

The benefits are:

• Penalty-free Late UAE Corporate Tax Registration: Businesses can avoid late registration penalties by filing within a seven-month extension.
• Encouraging Timely UAE Corporate tax compliance: The UAE FTA penalty waiver motivates businesses to comply with new UAE corporate tax, instilling to register early and reducing the risk of future compliance.

How Does Partnering with a UAE FTA Registered Tax Agent Like Jaxa Make a Difference?

Jaxa Chartered Accountants is a leading and trusted auditing and accounting as well as taxation firm across the UAE and Dubai and is also an FTA approved Tax Agent. Our team of corporate tax consultants, having 18 years of experience, helps clients navigate the evolving UAE corporate tax framework.

Let the Jaxa team assist you in corporate tax registration and filing procedures with ease. Our team of seasoned consultants helps clients to file timely corporate tax returns within stipulated deadlines, so that you can take advantage of the UAE corporate tax penalty waiver. Now it’s the time to act when the UAE offers a limited FTA penalty waiver.

Stay compliant with zero penalties- Jaxa keeps you ahead of deadlines. With Jaxa, UAE corporate tax compliance is clear, quick, and penalty-free. Contact us now for a Free Consultation.