UAE Waives Corporate Tax Penalties for Delayed Registrations

Fazil

May 1, 2025

Tax in UAE

In a significant move aimed at supporting businesses and promoting voluntary compliance, the UAE Ministry of Finance (MoF) and the Federal Tax Authority (FTA) have announced a Cabinet Decision to waive administrative penalties for corporate taxpayers and certain exempt entities that missed their tax registration deadlines. This initiative is especially relevant as the UAE continues the rollout of its new Corporate Tax Law in 2025.

At Gateway Accounting Services, we’re committed to helping UAE-based businesses navigate these regulatory changes with confidence. Here’s a breakdown of what this means for your company and how you can benefit.

What Does the Cabinet Decision Mean?

The Cabinet Decision introduces a temporary penalty waiver for businesses and exempt persons who failed to register for corporate tax within the original timeline. The waiver applies to administrative penalties previously imposed due to late registration with the Federal Tax Authority.

To qualify for the waiver, eligible businesses must:

Submit their corporate tax return or annual financial statements within seven months from the end of their first tax period, as required by the Corporate Tax Law.

This move is expected to ease the transition for many businesses in the UAE that are still adjusting to corporate tax regulations introduced in 2023 and implemented from 2024 onward.

Why This Matters for UAE Businesses

This decision reflects the UAE government’s proactive stance toward:

Facilitating tax compliance
Reducing the financial and administrative burden on new taxpayers
Supporting businesses in their first year of corporate tax obligations

By encouraging early compliance and providing financial relief, this initiative helps foster a smoother implementation of the tax system, especially for small and medium-sized enterprises (SMEs).

Refund of Administrative Penalties

According to the FTA, businesses that meet the eligibility criteria will also be refunded any administrative fines already paid. This is a rare opportunity to recover financial losses while ensuring future compliance.

If your business has already paid a penalty for late registration, now is the time to reassess your eligibility and take the necessary steps to apply for a refund.

Key Compliance Tips from Gateway Accounting Services

At Gateway Accounting Services, we strongly advise UAE businesses to:

Review your corporate tax registration status – If you missed the original deadline, act now to submit your tax return within the seven-month grace period.
Maintain accurate and timely records – Ensure that your financial statements are audit-ready and comply with the latest FTA guidelines.
Seek professional support – Tax laws are complex and evolving. Partnering with a professional accounting firm helps ensure you’re always a step ahead.

Our team is well-versed in UAE tax law and can assist with:

Tax registration and filing
Financial statement preparation
Identifying eligibility for penalty waivers or refunds
Strategic tax planning and advisory

Conclusion

To elect for Small Business Relief, businesses must:

Assess Eligibility: Ensure your business meets the conditions.
Submit the Election: File the request through the UAE Federal Tax Authority (FTA) portal.
Maintain Records: Keep financial and tax documents updated for compliance.

The UAE’s decision to waive penalties for late corporate tax registration is a welcome relief for many businesses. But the window of opportunity is limited — timely action is crucial. Whether you’re a new business owner or a seasoned entrepreneur, this is your chance to get compliant without the burden of penalties.

Let Gateway Accounting Services be your trusted partner in corporate tax compliance. Contact us today to ensure your business meets the FTA’s requirements and takes full advantage of this initiative.

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