FTA Clarifies Dh10,000 Penalty Waiver for Late Corporate Tax Registration

Dubai: The Federal Tax Authority (FTA) has released a detailed clarification (CTP006) regarding the corporate tax late registration penalty waiver initiative introduced in May. This follows the implementation of Dh10,000 penalties for failing to register for corporate tax within the timelines announced earlier in 2024.

Who is eligible for the waiver?

The waiver is available to both companies and individuals registered for corporate tax. To qualify, the tax return must be filed within seven months from the end of the first tax period, rather than the standard nine months.

It’s important to note that July 31 is the tax return deadline only for entities with a January–December financial year. For those following an April–March cycle, the deadline is September 30.

Entities exempt from corporate tax, such as Qualifying Public Benefit Entities (QPBE) and Qualifying Investment Funds (QIF), are also eligible — provided their annual declaration is submitted within seven months of the end of their financial year.

Is early tax payment required?

No. The FTA clarified that tax payments remain due within nine months, even if the return is filed earlier to qualify for the waiver. The penalty waiver impacts only the return submission timeline, not the tax payment deadline.

Do you need to apply for the waiver?

No formal application is required. The penalty waiver will be automatically applied via Emaratax once the return is filed within the seven-month window. If the penalty was already paid, the Dh10,000 will be credited to the taxpayer’s corporate tax account, which can be used against future tax liabilities or refunded.

New companies incorporated in 2025

Companies formed on or after March 1, 2024, must register for corporate tax within three months of incorporation. Failure to do so has led many new businesses to incur penalties. However, the FTA’s clarification indicates that the waiver initiative also applies to first-time tax periods in the future, offering hope for penalty relief in 2026.

Tax group members

If a company that received a late registration penalty becomes part of a tax group, it can still benefit from the waiver — as long as the group’s tax return is filed within the seven-month deadline.

Encouraging compliance

The waiver initiative aims to ease financial burdens and promote voluntary tax compliance across the UAE. Businesses are encouraged to ensure timely return submission and benefit from the available relief.