Case Study: FTA’s Penalty Relief for Late Corporate Tax Registration

Case Study: FTA's Penalty Relief for Late Corporate Tax Registration – A Crucial Window for Compliance

Welcome to the UAE’s New Tax Landscape

As the UAE enters a new tax era with the implementation of Corporate Tax under Federal Decree-Law No. 47 of 2022, businesses are required to comply with new obligations, including timely registration and submission of tax returns. However, many entities missed their initial Corporate Tax registration deadlines, resulting in penalties.

In a welcome move, the Federal Tax  Authority (FTA) has announced a temporary relaxation: Taxable persons who received penalties for late registration can now have those penalties set off—if they file their Corporate Tax return within 7 months from the end of their first tax period.

Legal Context - What the Law Says: Articles You Must Know 

According to Article 53 of the UAE Corporate Tax Law (Federal Decree-Law No. 47 of 2022):

“The Taxable Person shall file a Tax Return with the Authority no later than 9 months from the end of the relevant Tax Period.”

Furthermore, Cabinet Decision No. 75 of 2023 outlines administrative penalties, including AED 10,000 for late Corporate Tax registration.

However, based on a recent announcement from the FTA, taxable persons who have incurred this penalty can have it waived if they meet the condition of filing the return within 7 months of the end of their first tax period.

Case Example - Real-World Scenario: How Company ABC Can Save AED 10,000

Let’s consider a typical case:

Company ABC LLC

First Tax Period: 1 January 2024 to 31 December 2024

Standard Return Due Date: 30 September 2025 (9 months from FY end)

FTA’s Penalty Relief Condition: File return by 31 July 2025 (within 7 months from FY end)

Now, if Company ABC registered late and has already received a AED 10,000 penalty, they can avoid this penalty entirely if they submit their Corporate Tax return on or before 31 July 2025.

What if You Haven’t Registered Yet for corporate tax?

Here's Your To-Do List

If your business is taxable under UAE Corporate Tax and you have not yet registered, this relaxation period is your last chance to avoid penalties altogether.

Here’s what you need to do:

Register immediately with the FTA for Corporate Tax
 

Ensure your tax return is filed before 31 July 2025 (if your FY ends on 31 December 2024)

Maintain necessary accounting records and prepare early to avoid last-minute issues

Failing to register and file on time will lead to penalties, and this relief will no longer be applicable beyond the 7-month window.

Why This Penalty Relief Is a Big Deal

This measure offers taxpayers:

 A second chance to comply without the financial burden

 Relief from an AED 10,000 penalty
 A chance to start on a clean compliance slate

The FTA’s move demonstrates a supportive and flexible approach during the transition phase, while also emphasizing the importance of acting quickly.

Your Action Plan Before July 31, 2025

The FTA’s relief provision for penalty set-off is a golden opportunity, especially for businesses that missed initial registration deadlines.

Already received a penalty? File your Corporate Tax return before 31 July 2025 to have it waived.

Haven’t registered yet? Please do it now and file your return within the 7-month grace period to avoid penalties.

Need help with your Corporate Tax return? Get in touch with us today.

CA Purvi Mehta I Associate Director – Direct Tax
M: +971 52 280 0480
E: purvi.mehta@claemirates.com