Waiver of Penalties for Late Corporate Tax Registration in the UAE (2025 Guide)

What is the Waiver of Penalties Initiative?

The Federal Tax Authority (FTA) has launched an initiative to waive penalties for late submission of corporate tax registration applications. This means if your business missed the registration deadline, you still have a chance to avoid paying a fine—if you meet certain conditions.

This initiative is part of the FTA’s continuous effort to support the UAE’s growing business environment. It gives businesses the flexibility to comply with the law without worrying about heavy fines, as long as they act within the specified timeframe.

Who Can Benefit From the Penalty Waiver?

The target group for this initiative includes:

• Businesses that have already registered for corporate tax but submitted the registration late and received a penalty.
• Businesses that have not yet submitted their corporate tax registration application.

In short, any entity required to register for UAE Corporate Tax—whether already penalised or still pending registration—can benefit from this waiver if they act quickly and responsibly.

Conditions for Penalty Waiver

To qualify for this waiver, businesses must do two key things:

• 1. Submit the tax return (if taxable) or the annual declaration (if exempt from corporate tax).
• 2. Make the submission within seven (7) months from the end of their first tax period.

This simple condition is the gateway to having your administrative penalty cancelled—or even refunded if you already paid it.

Corporate Tax in Brief (For New Businesses)

Before we go into the scenarios, here’s a quick reminder:

• Corporate tax in the UAE applies to taxable income earned by businesses.
• All resident and non-resident entities with a business presence in the UAE are required to register for corporate tax.
• Even exempted entities (like some free zone companies, government entities, or charities) must submit a declaration to the FTA annually.

If you're unsure about whether your business needs to register, it’s best to check with a tax consultant or the FTA directly.

Understanding the Scenarios – Where the Waiver Applies

Let’s break down the different situations where this waiver comes into play, so you can see which one matches your case:

• Scenario 1: Penalty Issued, Not Paid, Tax Return Submitted
  You registered for corporate tax but did it late and received a penalty, which you haven’t paid yet. However, you went ahead and submitted your tax return within 7 months after your first tax period ended.
  Result: Your penalty will be waived—you don’t have to pay it.
• Scenario 2: Penalty Issued, Not Paid, Return Not Submitted Yet
  You registered and were issued a penalty for late registration, but you have not yet submitted your tax return.
  Action: If you submit your return within 7 months from the end of your first tax period, the penalty will be waived.
• Scenario 3: Penalty Paid, Return Not Submitted
  You registered late, received a penalty, and already paid it. However, you haven’t submitted your tax return yet.
  Action: Submit your return within 7 months from the end of your first tax period.
  Result: The amount you paid will be refunded to your tax account.
• Scenario 4: Penalty Paid, Return Submitted
  You registered late, paid the penalty, and also submitted the return within 7 months.
  Result: The penalty amount will be refunded to your tax account.
• Scenario 5: Registration Not Done Yet
  You haven’t registered your business for corporate tax at all.
  Action: Complete your corporate tax registration and submit your return (or annual declaration) within 7 months from the end of your first tax period.
  Result: If you do this on time, no penalty will apply, even though you initially delayed registration.

What Is the "First Tax Period"?

Your first tax period depends on your company’s financial year. Most businesses in the UAE follow either:

• Calendar Year: 1 January 2024 – 31 December 2024
• Fiscal Year: Any other 12-month period like 1 July 2023 – 30 June 2024

From the end of your first tax period, you get 7 months to submit your tax return or declaration. Meeting this deadline is crucial for getting your penalty waived or refunded.

Common Questions (FAQs)

• 1. What happens if I miss the 7-month deadline?

  You may have to pay the full penalty if you do not meet the 7-month submission deadline.

• 2. Is the refund automatic?

  Yes, once conditions are met, the penalty amount will be refunded to your EmaraTax account. You can use it to pay future tax liabilities.

• 3. What if my company is exempt from tax?

  Even if you’re exempt, you must still register and submit an annual declaration to benefit from the waiver.

• 4. Can I get help with this process?

  Yes, you can consult with a tax agent or contact the FTA directly for support.

How FTA Approved Tax Agency BSD Prime Services Can Help Businesses?

BSD Prime Services, an FTA-approved tax agency in the UAE, is dedicated to supporting businesses with end-to-end tax compliance and advisory solutions. Whether you're a startup, SME, or large enterprise, BSD Prime Services ensures that your corporate tax registration, returns, and annual declarations are filed on time—helping you qualify for administrative penalty waivers under the new initiative. With a team of experienced tax professionals, they provide expert guidance, simplify complex procedures, and represent clients directly before the Federal Tax Authority (FTA). Their proactive approach helps you avoid penalties, save money, and stay fully compliant with evolving UAE tax laws—giving you more time to focus on growing your business.