Big Announcement: FTA Waives Penalty for Late Corporate Tax Registration in UAE

The UAE’s image as a tax-free land is well known and the nation has once again reinforced this reputation with a significant move. In a major step to strengthen its position as a tax-safe haven, the UAE government has announced a new cabinet decision granting fine relief to those who missed the tax registration deadline.

This initiative aims to ease the burden of tax regulations for businesses in the UAE, allowing them to easily adapt to the new tax regime and operate stress-free in a more conducive environment.

The UAE has made a promise to the world, to welcome all investors and businesses with open hearts, and it is absolutely living up to its words!

New cabinet decision: UAE corporate taxpayers find relief

The Federal Tax Authority (FTA), along with the Ministry of Finance, has come up with a new initiative to ease the financial burden on businesses in UAE in the initial stages of corporate tax registration.

In April 2025, a new Cabinet Decision was announced, according to which the administrative penalties for corporate taxpayers who failed to submit their initial tax registration application to the FTA within the required deadline have been cancelled. Qualifying entities who have already paid such fines will receive a refund of amount from FTA.

This initiative covers businesses of all sizes and types, including SMEs, startups, and exempt categories. Previously, businesses that missed the registration deadline had to pay up to AED 10,000 for the first violation and AED 20,000 for subsequent violations.

However, under the new initiative, businesses in the UAE now have the opportunity to align their tax status with regulatory requirements while avoiding hefty fines.

Who can benefit from penalty waiver?

The penalty waiver for late corporate tax registration in UAE can be availed by businesses who meet the following conditions:

Eligible groups:

The waiver is meant for eligible taxable businesses, including exempted entities, free zone companies and mainland entities with active licenses. It covers entities that:

• Have not submitted their tax registration with the FTA by the required deadline in their first taxable period.
• Have incurred administrative penalties due to such late registration submission.

Filing requirement:

Eligible taxable entities must submit their tax return within seven (7) months from the end of the first tax period.

For exempted persons, they are required to submit the annual declaration within seven (7) months from the end of the first financial period.

Compliance requirement:

The entity must fully comply with all the provisions of the UAE Corporate Tax Law. This also includes ensuring accurate financial statements and maintenance of proper bookkeeping and accounting records.

Impact of the initiative

The initiative is yet another example of the UAE government’s efforts in making the nation as tax friendly as possible for its investors. Here are the objectives that the initiative serves:

• Promotes voluntary compliance with corporate tax law where businesses no longer fear fines.
• Eases out the administrative burden for businesses in their initial stages, letting them focus on their growth.
• Promotes on-time submission of tax returns and annual declarations by eligible entities.
• Provides a support system for startups and SMEs, helping them adapt to the UAE tax regime and rules.
• Reinforces the UAE’s position and competitiveness as a global economic player.

Next steps for businesses

To take advantage of the initiative, eligible entities must:

Register with the Federal Tax Authority (FTA): Sign up on EmaraTax to complete the registration and filing returns.

Consult professional tax experts: Seek guidance from professionals to ensure legal compliance.

Wrapping up!

The corporate tax waiver strengthens the UAE’s tax system and helps businesses transition smoothly into it. It’s a great opportunity to avoid fines for those who missed their corporate tax registration deadline in UAE.

To ensure compliance, you can register through the FTA’s official tax portal, EmaraTax, and manage all your tax obligations from there.

And if you need any help, we are always here to guide you. Dubiz tax experts can support your business setup in UAE throughout its tax journey in the UAE. With us, you can ensure timely registration, accurate filing, documentation assistance, and even check if you are eligible for a penalty refund.

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Frequently Asked Questions (FAQs)

1. What happens if business misses to file within 7 months?

In case a business misses the deadline of filing the returns within 7 months from end of its first taxable period, then it will not be eligible for the late corporate tax registration penalty waiver and will have to pay the administrative fines for violation.

2. Who can benefit from the FTA penalty waiver in UAE?

The FTA penalty waiver is meant for taxable businesses, exempt entities, freezone companies and mainland companies with active license, who meet the necessary filing requirement.

3. Can business get refund for fines already paid under new initiative?

Yes, if any eligible business has already paid fine for its initial late corporate registration, then FTA may refund any such paid fines provided they meet other conditions set by authority.

4. How can Dubiz help with corporate tax registration in UAE?

Dubiz offers comprehensive corporate tax registration services in UAE including corporate tax consultation, corporate tax registration, timely return filing and much more.