New Year, New Tax Rules: UAE Introduces Penalties for Late Corporate Tax Registration
Andy Wood • January 16, 2025
New Year, New Tax Rules: UAE Introduces Penalties for Late Corporate Tax Registration
Introduction
As businesses prepare for a fresh start in 2025, a crucial update for companies operating in the UAE has emerged: stricter penalties for late corporate tax registration. Against the backdrop of the UAE’s efforts to align with global tax standards, the Federal Tax Authority (FTA) has introduced new measures to encourage compliance and deter delays. These changes are a sharp reminder that, as with any jurisdiction’s tax framework, the devil is in the detail.
Why the Change?
The UAE corporate tax regime, introduced in June 2023, has been a seismic shift for businesses in a region long regarded as a tax haven. Now, the FTA is turning its attention to enforcement, particularly around corporate tax registration. Companies that fail to meet registration deadlines will face penalties designed not only to incentivise compliance but also to underline the importance of timely disclosure in a maturing tax system.
The penalties, effective from January 2025, range from AED 1,000 for the first month of delay to escalating monthly fines of AED 2,000, capped at AED 50,000. The message is clear: procrastination will be costly.
Navigating the New Tax Landscape
With these penalties in place, businesses must act swiftly to ensure compliance. For some, this may mean registering for the first time; for others, it’s about double-checking that existing registrations meet the FTA’s requirements. Either way, the onus is firmly on companies to avoid unnecessary costs.
Here’s how to prepare:
1. Audit Your Tax Obligations:
Understand whether your business falls within the scope of UAE corporate tax and ensure all registration requirements are met.
2. Seek Professional Guidance:
The UAE tax regime is nuanced. Working with our tax adviser
can help with the finer points and ensure complete compliance.
3. Act Early:
Registration deadlines can creep up. Build a timeline to avoid last-minute scrambles and penalties.
Late Registration Penalties: What You Need to Know
The penalties for failing to register for UAE corporate tax on time include:
• AED 1,000 for the first month of delay.
• AED 2,000 for each subsequent month of delay.
• A maximum penalty cap of AED 50,000.
While these figures may seem modest compared to penalties in other jurisdictions, they represent a significant shift for the UAE, signalling its commitment to creating a robust tax framework.
Frequently Asked Questions (FAQs)
1. What is the deadline for corporate tax registration in the UAE?
The registration deadline depends on your company’s financial year. For most businesses, registration must be completed before their first tax return is due.
2. What happens if I miss the registration deadline?
Companies that fail to register by the due date will incur a penalty of AED 1,000 for the first month and AED 2,000 for each additional month of delay, up to a maximum of AED 50,000.
3. Can the penalties be waived or appealed?
The FTA may consider waiver requests on a case-by-case basis, particularly if there are extenuating circumstances. However, companies must demonstrate good faith and provide evidence to support their claim.
4. How can I ensure compliance with the corporate tax rules?
Engaging a tax adviser
or consulting with legal professionals experienced in UAE tax law is the best way to ensure compliance. Regularly reviewing updates from the FTA will also help keep your business informed.
5. Are there penalties for incorrect or incomplete registration?
Yes, providing incorrect or incomplete information during registration can lead to additional fines. Accuracy is critical when submitting your details to the FTA.
6. Does the penalty apply to free zone entities?
Free zone entities are required to register for corporate tax, even if they qualify for a 0% tax rate. Penalties for late registration apply equally to free zone entities and mainland businesses.
The bottom line...
Businesses operating in the UAE will find these changes demonstrate the increasingly complex tax environment. Although penalties for late registration may seem minor, they're an indicator of greater transparency and accountability within this jurisdiction. Preparation is key. Whether registering your business for the first time or making sure it complies with all relevant legislation, 2025 is not the year to leave things to chance.
Have any questions about this article or need expert guidance on corporate tax registration and understanding the UAE’s ever changing tax regime, contact us today.
If you’ve missed your Corporate Tax registration deadline or already paid the AED 10,000 fine, there’s now a golden opportunity to waive or reclaim that penalty — but only if you act quickly. In a recent move to support businesses during the first year of the UAE’s Corporate Tax rollout, the Federal Tax Authority (FTA) has announced a limited-time grace period. The initiative allows eligible businesses to apply for a full penalty waiver if they file their Corporate Tax return early. This is a major relief for thousands of companies who have either: Missed their Corporate Tax registration deadline, or Registered late and were hit with the AED 10,000 fine Why is this happening? According to Gulf News, this initiative is part of a broader effort by the Ministry of Finance and the FTA to ease the transition into the new Corporate Tax system and promote long-term compliance. What You Need to Know: Deadline for the waiver: July 31, 2025 BUT: You must file your return well ahead of your official tax deadline to qualify. Don’t wait – gathering your financial records and preparing your tax return can take time. For most businesses operating on a calendar year basis (Jan–Dec), that means filing within the next couple of months. Who qualifies for the penalty waiver? If you’re asking: “Can I get a refund on my Corporate Tax late registration fine in the UAE?” “Is it possible to waive the AED 10,000 Corporate Tax penalty?” “How do I apply for the UAE Corporate Tax penalty relief?” Then the answer is – yes, you may be eligible. But there’s a catch: you must file your tax return early, ahead of your normal deadline. This is not automatic, and if you miss the window, the fine will not be waived or refunded. Why early filing matters: The FTA has made it clear: early compliance is the only route to relief. This means: Completing your Corporate Tax registration (if not already done) Preparing your financials for your first tax year Submitting your Corporate Tax return well before the deadline This one-time waiver won’t be repeated – so don’t leave it until the last minute. How Mosaic Chambers Group can help: At Mosaic Chambers Group, our FTA-certified tax advisors and legal consultants are ready to guide you through the entire process. Whether you need help: Understanding your eligibility Filing your Corporate Tax return early Claiming your AED 10,000 fine refund Or ensuring future tax compliance We’re here to take the stress out of Corporate Tax. Book a free consultation today and get expert support from our team. Click here to get in touch or below to book your call.
April 6th, 2025 marks the beginning of a major shift in UK taxation. Labour’s new tax reforms have officially scrapped the long-standing non-domiciled (non-dom) tax status — a move that targets wealthy individuals who live in the UK but, under the new non dom regime, have been able to mitigate UK tax on their overseas income and gains. This change spells the end of a tax break that attracted many high-net-worth individuals (HNWIs) to the UK and is already causing ripples across the country’s elite financial circles. The message is clear: if you live here, you pay here. Let's break down what has changed. What Was the Non-Dom Tax Regime? The non-dom tax regime allowed individuals residing in the UK, who claimed their primary home (domicile) to be outside the UK, to avoid UK income and capital gains taxes by not bringing any foreign earnings or gains back into the UK. This system made the UK an attractive location for individuals with international earnings. We covered this in more detail here. What Has Changed? Since 2025-26 tax year, the government has implemented several significant reforms. These reforms include: 1. End of Non-Dom Status All UK tax residents will now owe UK income tax on all global income and gains, regardless of whether these were brought into the country or not. 2. Inheritance Tax (IHT) on Foreign Assets Non-doms could previously avoid UK Inheritance Tax on assets they held outside the UK; now individuals who have lived here for more than four years will be liable for IHT on all their global estate assets. 3. Temporary Reliefs To assist the transition, temporary measures include the following: Tax Year 2025-26 will see a 50% reduction on foreign income tax. Capital Gains Tax (CGT) laws allow us to rebase overseas assets based on their value as of April 2019 for CGT purposes. Temporarily, bringing money from abroad may not incur full tax charges upon entering the UK. Why Has the Government Made These Changes? According to Labour, eliminating non-dom status will provide many advantages: Enhance tax fairness Raise extra funds to support public services Close longstanding loopholes used by the wealthy Rising Tax Bills HNWIs with overseas assets and income will now face significantly increased tax obligations that may have an effect on personal finances, family planning and wealth transference. Making Decisions About Moving Abroad Some individuals are already leaving the UK in order to settle in countries with more advantageous tax regimes. Some common destinations for relocation include: United Arab Emirates (UAE) does not levy income or capital gains tax Switzerland provides fixed annual tax arrangements for its most wealthy citizens Italy - flat tax of EUR100,000.000 on foreign income for new residents Monaco does not levy personal income tax for residents Concerns Raised About Impact Within Industry Concerns are being expressed that this could lead to a decrease in: Investment into UK businesses Jobs funded by private wealth Donations to UK Charities What About Entrepreneurs? Many entrepreneurs utilise non-dom status to reduce tax on international business earnings, however, these changes could require: Establishing headquarters or structures outside the UK Reconsider ownership of intellectual property or company shares An investigation of how profits and dividends are managed is important to ensure long-term growth. What Should Be Done Now? If you or those you work with have been affected, taking immediate steps is key to their safety. Here are a few things you can do. 1. Consult With A Specialist Tax Advisor Every situation varies. Seek tailored guidance from someone familiar with both UK and international tax regulations. 2. Evaluate Your Financial Structures Evaluate how you hold assets - for instance through offshore companies or trusts. Any necessary changes must be implemented for optimal efficiency and compliance purposes. 3. Consider Relocating If the UK's new tax rules no longer suit, you might wish to explore living elsewhere where tax liabilities would be lower. Be sure to carefully consider all legal, financial, and family aspects prior to making any decisions. Summary The changes to the non-dom tax regime mark a profound transformation for those who rely on global income and wealth for tax payments, especially those living abroad. Although intended to increase fairness, these reforms also pose challenges to those accustomed to using it. Now is the time to review your plans, secure your assets, and seek professional guidance. How Can We Assist? At our offices in both the UK and UAE, we assist individuals, entrepreneurs and professional advisors in making well-informed decisions. If you have any queries about this article or need advice then get in touch.