MIDDLE EAST TAX ALERT | UAE | Waiver of UAE Corporate Tax (CT) Registration penalties
On May 5, 2025, the Federal Tax Authority (FTA) announced on their LinkedIn page and on Dubai Eye and Dubai One an initiative to waive penalties for late CT registration, if a taxpayer submits their CT return within seven months from the end of their first tax period. The initiative is being introduced to encourage early compliance from taxpayers on their CT obligations.
Overall, this is a positive development, and we encourage UAE taxpayers that have or could suffer late CT registration penalties to take advantage of this.
The penalty waiver will apply in the following cases:
- A taxpayer completes the registration process and was issued a penalty for late registration, which remains unpaid. The penalty will be waived if the taxpayer submits the tax return within seven months following the end of their first tax period.
- A taxpayer completes the registration process and was issued a penalty for late registration, which has been paid. If the taxpayer submits their CT return within seven months following the end of their first tax period, the amount paid will be refunded to their tax account.
- Where a taxpayer has not submitted a CT registration application on time, the late registration penalty will be waived if the taxpayer completes the registration process and submits the CT return within seven months following the end of their first tax period.
- For businesses that registered late for UAE CT but are now considered as an exempt person (following approval by the FTA), such as Qualifying Investment Funds. The penalty will be waived (if not paid) and, if paid, will be refunded to their tax account, if they submit the annual declaration within seven months from the end of their first tax period.
Businesses that have been issued with late registration penalties should consider submitting their UAE CT return within the timeframe to benefit from the penalty waiver regime. For those with calendar year ends, this means there is an opportunity to benefit from this waiver if the CT return is filed by the end of July 2025. The FTA also highlighted that any CT payable must be paid within nine months of the end of their tax period. Therefore, businesses who opt to benefit from the regime have two additional months to pay any CT due.
Please reach out to a member of the A&M tax team if you have any questions on this. We are happy to support you, should you require any assistance with your UAE CT and Transfer Pricing obligations.
