As per Cabinet Decision No. 75 of 2023, UAE business entities have been liable for a penalty of AED 10,000 if they fail to apply for corporate tax registration by a deadline set by the FTA. Such a heavy penalty load would result in bankruptcy or even business closure in the UAE, especially for startup businesses.
To address this issue and promote a tax-friendly environment in the UAE, the UAE Cabinet, the Ministry of Finance, and the Federal Tax Authority (FTA) announced a corporate tax penalty waiver. This waiver helps businesses to either refund or reverse the penalty amount for qualified businesses.
In this article, we briefly describe the details of this penalty waiver, its purpose, who qualifies, the application process, and why it is important to act before the deadline. In the end, we also explain how our tax consultants can help you at every step to avoid penalties and benefit from this relief.
What Is the UAE Corporate Tax Penalty Waiver?
The corporate tax penalty of AED 10,000 has been adversely affecting the businesses; therefore, there is a formally issued Corporate Tax Public Clarification (CTP006) under the FTA. The clarification outlines the waiver of administrative penalty for failure to submit a corporate tax registration application within a specific time. It further explains the reverse or refund of the administrative penalty for Taxable Persons, and certain Exempt Persons in the UAE.
This corporate tax penalty waiver applies to penalties incurred from 1 June 2023 onwards, with some requirements. According to the above clarification, businesses can avoid the penalty if they submit their initial corporate tax return or annual financial statement within seven months following the end of their first tax period.
Why Was This Waiver Introduced?
The waiver was introduced to support businesses during the transition to the UAE’s corporate tax system. Many entities were unaware of the deadlines or unsure of the registration process. The FTA acknowledged that the penalty may cause a huge burden, especially for small and medium enterprises (SMEs), and decided to provide a solution that promotes tax compliance.
Therefore, this one-time relief is designed to ease compliance pressure on businesses, encouraging timely filing and supporting the smoother implementation of the UAE’s corporate tax system. Moreover, the waiver helps maintain the UAE’s reputation as a business-friendly environment by giving companies an opportunity to correct their compliance status without immediate financial penalties.
Who Is Eligible for the Corporate Tax Penalty Waiver?
Businesses in the UAE have to meet the following eligibility conditions in order to qualify for this penalty waiver, as given below:
- The penalty must specifically relate to late registration under corporate tax law.
- The entity must not have previously benefited from similar administrative relief for the same type of violation.
- Companies must file their corporate tax return or annual financial statement within seven months from the end of their first tax period.
The waiver applies to a wide range of businesses, including:
- Mainland companies with valid trade licenses.
- Free Zone entities earning qualifying income and maintaining economic substance.
- Public benefit organizations and qualifying investment funds.
- Private firms, startups, and LLCs that are registered for corporate tax.
If the companies fulfill the above criteria, the penalty waiver is granted, depending on the application and FTA’s review.
Corporate Tax Penalty Waiver Deadline:
The deadline for the corporate tax penalty waiver is July 31, 2025. If you file your corporate tax return before this date, the AED 10,000 penalty will be waived. Even if you’ve already paid it, the FTA will refund the amount. Act now and don’t miss this limited-time relief.
The following table helps you understand your timeline:
| Company Incorporation Date | First Tax Period | Filing Deadline (Penalty Waiver Eligible) |
| January 1, 2024 | Jan 1 – Dec 31, 2024 | July 31, 2025 |
| July 1, 2024 | Jul 1, 2024 – Jun 30, 2025 | January 31, 2026 |
| November 1, 2024 | Nov 1, 2024 – Oct 31, 2025 | May 31, 2026 |
To take advantage of this relief, businesses must ensure their corporate tax return is submitted by the applicable deadline, based on their specified tax period.
You can also get your already paid penalty refunded by the FTA, just like we did for one of our clients.
FTA Requirements To Qualify For Waiver:
To qualify for a Corporate Tax waiver under FTA’s Public Clarification CTP006, the taxable person must file their first tax return within seven months after the end of the tax period. This applies to both individuals and members of a Corporate Tax Group.
You need to provide valid documentation or justification, and ensure there are no other outstanding tax violations. The waiver will only be considered if the taxpayer demonstrates genuine efforts toward compliance and has not repeatedly violated tax laws.
How To Apply For a Refund If You Already Paid The Penalty:
If you have already paid the administrative penalty of AED 10,000 but meet the above waiver conditions, you can apply for a refund. The following is the step-by-step method:
Step 1: Make Sure You Filed on Time:
To qualify for a refund, the first thing you need to ensure is that your corporate tax return was submitted within the allowed seven-month period from the end of your financial year. If your filing is late, you may not be eligible for a waiver or refund.
Step 2: Log In to the EmaraTax Portal:
The second step is to log in to the EmaraTax portal using your registered credentials. Under your dashboard, locate the section for ‘Administrative Penalty Reconsideration’ related to corporate tax.
Step 3: Upload Supporting Documents:
To support your refund claim, you should attach corporate tax returns within the 7 months and any other relevant evidence that shows you met the conditions for the waiver.
Step 4: Wait for FTA Review and Decision:
After submitting the request, the FTA will review your application and supporting documents. If everything is in order and the criteria are met, the refund will be approved. The entire review process can take up to 40 business days, so it is important to monitor the EmaraTax portal for updates.
Note: If a person has already asked the FTA to remove the Late Registration Penalty and the request was approved, they cannot get another waiver under the CTP006 initiative.
Why This Matters to Businesses in the UAE?
This waiver is more than just avoiding a penalty; it is about building trust with tax authorities and securing the future of your business. Failure to comply with corporate tax laws not only results in penalties but can damage your company’s legal health and credibility. By taking advantage of this waiver, businesses can stay compliant, save money, and focus on growth without administrative hurdles.
How Now Consultant Can Help You?
If you are under the administrative penalty for late corporate tax registration, you need to consult with a tax advisory firm such as Now Consultant. Our tax expert team helps you through every step of the process to get this corporate tax penalty waiver from the FTA. We help you check your eligibility and the duration of the late tax registration, and make sure everything is managed in an effective way to build trust in your business with the FTA.
We also ensure each step is handled accurately, on time, and in full compliance with FTA rules. We do not just help you avoid mistakes, but also mitigate financial and legal risks, save money, and take advantage of the penalty waiver.
FAQs:
What types of penalties can be waived under the Corporate Tax Penalty Waiver?
Only the AED 10,000 administrative penalty for late corporate tax registration can be waived under this initiative. This relief applies even if the penalty has already been issued or paid, provided you file within the set deadline.
How do I apply for the penalty waiver?
To apply for the penalty waiver, you need to log in to the EmaraTax platform. Here comes an option of ‘Administrative Penalty Reconsideration’. You can apply for the penalty waiver through this option.
Can I get a refund for penalties already paid?
Yes, if you file your tax return or declaration within seven months from the end of your first tax period, the AED 10,000 penalty you already paid will be refunded into your EmaraTax account.
What happens if I miss the waiver deadline?
If you miss the July 31, 2025, uae corporate tax penalty waiver deadline or do not apply for a waiver in time, the AED 10,000 penalty becomes due and cannot be waived or refunded.
