The Federal Tax Authority (FTA) has rolled out a transitional relief mechanism to ease corporate tax compliance for UAE businesses. If you were late to register for corporate tax and received the AED 10,000 penalty, there’s now a way to have that penalty completely waived, but only if you meet the new 7-month filing window.
This one-time opportunity is valid only for your first tax period.
Who Is Eligible for the Waiver?
The waiver applies to a wide range of business structures, including:
- Mainland companies
- Free Zone entities
- Certain exempt persons (e.g., qualifying investment funds, REITs)
If you file your first corporate tax return within seven months of the end of your financial year, the AED 10,000 late-registration penalty will be waived even if you haven’t registered yet.
Example: If your financial year ended on 31 December 2024, file by 31 July 2025 to qualify.
Already Paid the AED 10,000? Here’s What Happens
Businesses that already paid the penalty but meet the filing condition will get an automatic refund credited to their EmaraTax account. No extra paperwork is required, as long as your return is submitted within the seven-month window.
How Is This Different from the 9-Month Deadline?
There is a difference between filing grace and penalty waiver eligibility:
| Scenario | Action Taken | Result |
|---|---|---|
| Registered late, unpaid penalty | Filed within 7 months | ✅ Waiver granted |
| Registered late, paid penalty | Filed within 7 months | ✅ Refund processed |
| Not registered at all | Register & file within 7 months | ✅ No penalty charged |
While the standard corporate tax return filing deadline is nine months, penalty relief is only granted if you act within seven months.
Why This Matters for UAE Businesses
The waiver can save eligible entities AED 10,000 per registration and reduce compliance pressure on newly incorporated or previously unaware businesses.
This move facilitates a smoother transition into the UAE’s corporate tax system, which took effect in June 2023.
Avoid Penalties – Take Action Now
Don’t wait until the ninth month if you want to avoid the penalty. Make sure to:
- Confirm your first financial year-end
- File your return in EmaraTax within 7 months
- Review your account for refund eligibility if you have already paid
Need Help Filing Correctly?
KLOUDAC can assist with timely and compliant corporate tax filings. Our expert consultants help you avoid penalties and stay ahead of FTA regulations.