The Ministry of Finance has announced a corporate tax penalty waiver for companies that missed the deadline for Corporate Tax Registration (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 Registration penalty waiver applies in the following cases:
- Unpaid Late Penalty: If the authorities have already issued a late registration penalty to a taxpayer (but they haven’t paid it), they will waive the penalty provided the taxpayer submits 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 submits their CT return within 7 months, the authorities will refund the penalty amount to their tax account.
- Yet to Register: The authorities will also waive the penalty for late registration for those who still haven’t registered, provided the taxpayer completes registration and files the CT return within 7 months after their first tax period ends.
- Exempt Entities: The FTA now approves businesses like Qualifying Investment Funds as exempt, and they will also benefit. The tax authority will waive or refund their penalties 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. If you fail to act within this grace period, we may reinstate financial penalties.
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 you process penalty refunds correctly.