UAE: In a move to support businesses and encourage compliance with tax regulations, the United Arab Emirates (UAE) has announced a significant change regarding penalties for late corporate tax registration. The Federal Tax Authority (FTA) has begun implementing a Cabinet Decision to waive fines for businesses that missed the deadline for corporate tax registration, as long as they submit their tax return within a specific time frame.
Key Details of the Waiver
- The Cabinet Decision offers a reprieve to businesses that failed to register for corporate tax by the prescribed deadline.
- As per the new rule, businesses will not incur any penalties if they complete their tax registration and submit the tax return within seven months of the end of their first financial year.
- This deadline extension applies to both regular businesses and certain exempt organizations that are still required to register under the corporate tax law.
- The FTA has clear instructions that this seven-month grace period is applicable only to the first tax period, and businesses will need to adhere to the standard deadlines in subsequent years.
- Importantly, the waiver will apply regardless of whether the original deadline for registration passed before or after the announcement of this new decision.
Refunds for Previously Paid Fines
Businesses that have already paid penalties for late registration can also benefit from this new decision. If they meet the new tax return submission deadline, the penalty they paid will be refunded and credited to their tax account. This refund provision extends to companies that were fined for late submission of their tax returns, even if they had filed before the official announcement of the penalty waiver.
The FTA’s decision to refund previously imposed fines is seen as an additional incentive to encourage companies to promptly register and comply with tax requirements.
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A Call to Action Regarding Registration
Khalid Ali Al Bustani, the head of the FTA, has urged businesses that have not yet registered for corporate tax to take quick action, he further emphasized that businesses can submit their tax registrations and returns via the EmaraTax platform to qualify for the waiver. The FTA has been actively promoting the platform to simplify the process and facilitate easy registration for businesses.
Al Bustani also praised the efforts of businesses that have already registered, highlighting the significant progress made in the first quarter of 2025. Over 543,000 companies are now officially registered for corporate tax, underscoring the growing compliance with tax regulations.
Aims to Simplify Tax Compliance
The decision to waive penalties for late registration and tax return submission is part of the UAE’s ongoing effort to simplify the corporate tax system and foster a culture of voluntary compliance. The FTA views this as an opportunity to further raise awareness and provide businesses with the guidance necessary to understand and meet their tax obligations.
By easing the penalties for businesses that missed the registration deadline, the UAE aims to alleviate the burden on companies while ensuring that tax compliance remains a priority. The FTA has committed to providing continued support to help businesses navigate the complexities of the tax system and meet their responsibilities in the future.
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Moving Forward, Act Quicky
The deadline for the first tax period approaches, the FTA urges businesses to act quickly in order to take advantage of the penalty waiver. The UAE government’s decision to ease penalties and facilitate easier registration and tax filing represents a key step in ensuring that businesses remain compliant with the evolving tax landscape. This move is expected to provide businesses with the clarity and flexibility needed to adjust to new tax regulations smoothly.
In the coming months, the FTA will continue to raise awareness and offer guidance to businesses, helping them understand their obligations and the steps required to remain compliant with the UAE’s corporate tax laws.
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