The Corporate Tax framework gave a clear message to the businesses that compliance is non-negotiable. However, with any new tax regimes, there are bound to be transitional delays.
To ease the burden on genuine businesses making an effort to comply, the FTA had announced an initiative for the waiver of penalties for late corporate tax registration.
Corporate tax registration criteria:
The UAE introduced its Corporate Tax regime through Federal Decree-Law No. 47 of 2022, which came into effect for financial years starting on or after 1 June 2023.
Articles 3, 4, and 5 of Federal Tax Authority Decision No. 3 of 2024 set out the registration timelines for different categories of taxable persons.
For detailed information on timelines for Corporate Tax registration, refer to our blog: https://bcl.ae/dont-miss-the-deadline-uae-corporate-tax-registration-deadlines-explained/
The recent announcement by the Federal Tax Authority regarding corporate tax penalty waiver UAE aligns with provisions set under the corporate tax law in the UAE, ensuring fair practices and relief to eligible businesses.
Penalty for failure to register with corporate tax:
The Ministry of Finance issued Cabinet Decision No 10 of 2024 that specifies a penalty of AED 10,000 to be imposed for failure to meet the registration deadlines provided.
Waiver of penalty:
Under the recent announcement, businesses that submit their corporate tax registration within seven months after the end of their first tax period can have any late registration penalties waived. This is a welcome relief for companies that either missed the deadline and were fined or are yet to register at all.
On the other hand, even businesses that are exempt from corporate tax still need to submit an annual declaration — this must also be done within seven months from the end of their first financial year.
It’s important to distinguish these waivers from corporate tax exemptions in the UAE, which apply to specific business categories.
How to obtain the refund of the penalty paid?
- When a taxable person logs into the FTA portal, any penalty imposed for delayed corporate tax registration will appear under their account. However, if the corporate tax registration application is filed within seven months from the end of the first financial year, this penalty will be automatically cancelled by the FTA.
- In cases where the penalty has already been paid, the FTA will process a refund. The portal will reflect the reversal of the penalty, and the refund amount will be credited directly to the registered bank account within a few months.
Therefore, this refund will be processed automatically, without requiring any additional forms or steps.
We, at BCL, understand that businesses must focus on their core activities. We offer one-stop solutions for accounting, VAT, corporate tax, TRC, transfer pricing, and payroll, enabling businesses to maximize the benefits of outsourcing critical functions. Our team of experts helps and guides you in obtaining all necessary registrations and certificates and filing returns to ensure compliance and stay ahead of the competition.
To keep your business compliant and benefit from these waivers, always stay informed with FTA updates to avoid tax penalties.
For further information, reach out to our experts at nikhil@bclglobiz.com
