The Ministry of Finance has announced a corporate tax penalty waiver for companies that missed the deadline to register for Corporate Tax (CT). This move aims to support smooth compliance and reduce the burden on startups and SMEs navigating the evolving tax landscape.
Announced on May 5, 2025, this one-time waiver eliminates late registration penalties for businesses that meet specific conditions.
Who Can Benefit from the Waiver?
The Corporate Tax penalty waiver applies in the following cases:
- Unpaid Late Penalty: If a taxpayer was already issued a late registration penalty (but hasn’t paid it), the penalty will be waived provided they submit their CT return within 7 months from the end of their first tax period.
- Paid Late Penalty: If a taxpayer has already paid the penalty, and they submit their CT return within 7 months, the penalty amount will be refunded to their tax account.
- Yet to Register: For those who still haven’t registered, the penalty for late registration will also be waived, as long as the taxpayer completes registration and files the CT return within 7 months after their first tax period ends.
- Exempt Entities: Businesses like Qualifying Investment Funds, which are now approved as exempt by the FTA, will also benefit. Their penalties will be waived or refunded if they submit their annual declaration within 7 months of their first tax period’s end.
Why This Matters
This is a critical window for businesses to align their operations with the UAE’s Corporate Tax regime. Which officially came into effect for financial years starting on or after June 1, 2023. The Federal Tax Authority (FTA) has clarified that businesses must not only register but also maintain proper accounting records and submit timely returns going forward. Ignoring compliance now could lead to larger financial consequences in the future, including audits, fines, and even legal trouble.
This waiver is a critical opportunity to avoid penalties and ensure your business remains compliant. It’s time-sensitive; the 7-month rule is key. Failing to act within this grace period may result in financial penalties being reinstated.
Partner with KLOUDAC for Corporate Tax Compliance
At KLOUDAC, we specialize in UAE Corporate Tax registration, compliance, and advisory services. Our experienced team can help you:
- Register quickly and accurately
- Meet tax return deadlines
- Determine if you qualify for an exemption
- Ensure penalty refunds are processed correctly