Another calculated move to bring the UAE into line with international financial standards while preserving its business-friendly reputation is the implementation of corporate tax. The Federal Tax Authority (FTA) has announced a penalty waiver for businesses that missed the corporate tax registration deadline in order to assist them during this transition.
By allowing them to fulfil their tax obligations without the immediate burden of financial penalties, this move offers significant relief, especially for startups and SMEs. This post will describe the terms that apply, how the waiver operates, and how various situations are handled.
The Corporate Tax Registration Deadline
Businesses are required by UAE tax law to register for corporate tax within the FTA’s specified timeframes. According to FTA Decision No. 3 of 2024, there is a 10,000 AED administrative penalty for late registration.
Relief Through the Penalty Waiver
The FTA has launched a program that makes it easier for companies to apply for a penalty waiver, but there are requirements that must be fulfilled. Eligible businesses that finish their tax filing within seven months of the end of their first fiscal year are eligible for this incentive.
Who Can Qualify?
Here’s how the waiver applies to different cases:
Case 1:
The business registered late, received a penalty (but didn’t pay it), and filed the tax return within seven months of the financial year-end.
Result: The penalty is waived.
Case 2:
The business registered late and has not yet paid the penalty or filed the return.
Action: File the return (or declaration) within the seven-month window to qualify for the waiver.
Case 3:
The penalty has already been paid, but the tax return is still due.
Action: To get the paid penalty returned to the tax account, file the return within the allotted time.
Case 4:
The business registered late, paid the penalty, and also filed the return within seven months.
Result: The business’s tax account will receive a refund of the penalty amount.
Case 5:
The business has not registered or filed the return at all.
Action: If both steps are completed within seven months of the financial year’s end, the penalty will be waived.
Final Thoughts
The FTA’s penalty waiver offers a critical window for businesses that may have missed the registration deadline. As long as the tax return is submitted within seven months from the end of your first tax period, you may still be eligible for a full penalty reversal—even if you’ve already paid.
Act Now with Set Hub Tax & Accounting
The waiver applies to a wide range of businesses across the UAE. At Set Hub, we recommend taking swift action to ensure you’re eligible for this relief. Filing on time not only saves money but also strengthens your business’s compliance record in the UAE.
