UAE to waive late registration fees under corporate tax law

Companies must file their tax return within seven months of the end of their first tax period to qualify

The latest move is hoped to ensure better tax compliance. The National

The UAE will waive administrative penalties for corporate tax payers who failed to submit their registration applications in time, as part of efforts to boost tax compliance and support businesses.

The Ministry of Finance and the Federal Tax Authority said on Tuesday that a Cabinet decision has been issued to make the change.

To qualify, companies must file their tax return or annual statements within seven months from the end of their first tax period, as stipulated under the Corporate Tax Law, a statement said.

The FTA also confirmed that procedures will be put in place to refund administrative fines collected from those who meet the specified criteria.

The decision is aimed at enhancing tax compliance, enabling procedures and easing financial burdens on businesses.

The UAE's corporate tax law explained: Business Extra

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It is also expected to “significantly support” the UAE’s efforts to ensure better compliance during the first year of corporate tax implementation, the ministry and FTA said.

"This is superb news. While penalties exist to drive good compliance behaviour, the regulatory authorities are recognising businesses' burden with the launching of many new regimes where there was little before 2018," said David Daly, partner at the Gulf Tax Accounting Group in the UAE.

"It can be very confusing trying to navigate new laws, more so when it often comes in part from multiple sources."

However, details will be needed to understand under what specific circumstances will appeals be successful and what burden of proof will be required to clear those hurdles, he added.

The UAE introduced the federal corporate tax at a standard statutory rate of 9 per cent from the financial year beginning on or after June 1, 2023.

It brought the income of companies exceeding Dh375,000 ($102,110) within the taxable bracket. Taxable profits below that level are subject to a tax of zero per cent.

The Ministry of Finance also confirmed later that business owners in the country would be subject to corporate tax only if their turnover in a calendar year exceeds Dh1 million, ensuring that only business or business-related activity income is taxed.

Starting this year, the UAE has also imposed a new tax on large companies in the country as part of changes to its corporate tax law. Large multinational enterprises are to pay a minimum of 15 per cent tax on the profits generated in the country – up from the rate of 9 per cent – effective for financial years starting on or after January 1, 2025, the Ministry of Finance said at the time.