UAE Waives AED 10,000 Corporate Tax Penalty: All You Need to Know
Corporate tax in the UAE can seem confusing for many businesses and individuals. When the UAE first introduced corporate tax, everyone had questions about the rules, who should register, and which companies must pay. There was an AED 10,000 penalty for late registration, which caused a lot of stress for small businesses and tax residents.
Recently, the Federal Tax Authority (FTA) in the UAE announced a penalty waiver. This waiver gives people and companies extra time to register and understand the rules before facing big fines. Mubarak Al Ketbi (MAK) Auditing always helps clients understand these new changes and guides them through the process.
UAE Corporate Tax and the AED 10,000 Penalty
Corporate tax in the UAE is new compared to other countries. The standard corporate tax rate is just 9%, which is very business-friendly. You only need to pay corporate tax if your taxable income is above AED 375,000.
However, most tax residents must register for corporate tax even if they don’t owe any tax. It’s always a good idea to let an expert like Mubarak Al Ketbi (MAK) Auditing handle your tax registration to avoid mistakes.
What is the New FTA Penalty Waiver?
The FTA has introduced a penalty waiver for late corporate tax registration. If you missed the deadline, you now have a chance to avoid the AED 10,000 fine by registering and filing your returns within the given period.
This penalty waiver is not permanent. It’s a limited-time rule meant to help businesses and individuals adjust to the new tax system. If you miss the new deadline, the penalty will still apply.
UAE Corporate Tax Deadlines and Examples
Your corporate tax deadline depends on the end of your financial year (FY). You get seven months from the end of your FY to register and pay your tax.
For example:
- If your FY ends on April 30, 2025, you must register and pay by November 30, 2025.
Here are a few common situations:
| Scenario | Next Steps |
|---|---|
| Haven’t registered for corporate tax | Register on the FTA site and file within seven months of FY end |
| Registered late, paid penalty, haven’t filed return | Register and file return; wait for automatic refund of the penalty |
| Registered late, paid penalty, filed on time | Penalty will be refunded |
| Registered late, didn’t pay penalty, haven’t filed | Register and file return within seven months to get penalty waiver |
| Registered late, didn’t pay penalty, filed on time | No need to pay penalty |
How to Get a Tax Penalty Refund
If you’ve already paid a penalty, you can still get a refund. When you register for corporate tax and file your return within seven months of your FY end, the FTA will automatically credit the refund to your tax account.
VAT Penalty Waivers and Installments in the UAE
VAT penalty waivers are also available. Businesses can apply to the FTA to waive or reduce VAT penalties if they have a valid excuse. The FTA reviews each case separately.
Key Points for VAT Penalty Waiver:
- Apply for a waiver or installment plan directly to the FTA.
- Only tax agents or legal representatives registered with the FTA can apply for clients.
- Provide all required documents and a clear reason for the penalty request.
- The FTA reviews applications within 40 working days, then gives a decision within 20 days.
Common valid reasons for a VAT penalty waiver:
- Illness or death of a business owner or important employee.
- Technical failures in FTA systems.
- Government restrictions or other emergencies.
- Proof that all taxes were paid from the wrong tax account.
- Evidence that a violation wasn’t done intentionally.
For installments:
- The unpaid penalties must be at least AED 50,000.
- All taxes for that period must be paid before applying.
- No current dispute should be ongoing in court for the same penalty.
Procedures for Waiver and Installment Requests
- Use the authorized FTA forms and provide all required information.
- You can only submit one request for each penalty.
- The FTA will review and may ask for more information or guarantees.
- The committee will decide within 60 days, and if you don’t get a reply, consider the request rejected.
- The FTA can modify or cancel the installment plan if payments are missed.
Timeline for Penalty Refunds
If the FTA approves your penalty waiver and you already paid, the refund is credited to your tax account within 90 days. If you cancel your registration, the refund is paid in cash.
How Mubarak Al Ketbi (MAK) Auditing Can Help
Mubarak Al Ketbi (MAK) Auditing always helps UAE businesses and individuals stay compliant with tax and VAT laws. Our team can guide you through registration, filing, refunds, and penalty waiver applications. We take care of the paperwork, so you don’t have to worry about mistakes. Remember, a stitch in time saves nine—acting early saves money and trouble!
Our experts are always ready to answer your tax and VAT questions.
For more information, visit our office:
Saraya Avenue Building – Office M-06, Block/A, Al Garhoud – Dubai – United Arab Emirates
Or contact/WhatsApp us: +971 50 276 2132
