Corporate Tax Penalty Waiver in UAE: Who Qualifies and How to Claim It

The United Arab Emirates has further refined its corporate tax regime, which now includes clearly defined terms related to penalties and waivers. Having a clear idea of the FTA penalty waiver policy has become necessary for businesses working in the UAE. Companies can mitigate their financial burdens by leveraging this initiative, which provides a sense of reassurance in these challenging times.

Understanding the FTA's 2025 Waiver Policy

The FTA's waiver policy permits full or partial waivers of administrative penalties imposed on businesses, subject to specific conditions as outlined on the FTA's official website.

Timely return filing and taxes paid within the provided period of grace are essential requirements for taxable individuals to be eligible for the waiver. This grace period is particularly crucial for newly taxable individuals under the corporate tax regime.

For organizations whose first taxation period ends on or after December 31, 2024, the tax payment and filing deadline to avoid incurring penalties is July 31, 2025. Failure may have long-term penalties. Filing early to meet the corporate tax return deadline UAE should be done on time to avoid penalties.

Who Qualifies for FTA Tax Waiver

Businesses need to file their tax returns within seven months of the end of their first tax period to be considered eligible for the penalty waiver of late corporate tax registration.

Entities exempt from corporate tax need to submit their annual declaration within seven months from the end of their first financial year. 

This policy applies to all businesses that need to register for corporate tax UAE, whether they have not yet done so or have been penalized for late registration. 

Consider the following scenarios:

1. Taxpayers have not submitted the application for corporate tax registration: In this scenario, the taxpayer needs to apply for the registration and submit the return or annual declaration, as the case may be, within seven months from the end of their first tax period. If imposed, the penalty will be waived.

2. The taxpayer registered late and has already paid the penalty but has not yet filed the return: In this scenario, the taxpayer needs to submit the return or annual declaration, as the case may be, within seven months of the end of the first tax period. The penalty amount will be refunded.

3. The taxpayer registered late, paid the penalty, and filed the return on time: In this scenario, no further action by the taxpayer is required. The penalty amount will be automatically refunded.

4. The taxpayer registered late for the corporate tax and was issued a penalty. The penalty amount has not been paid, and the return has not been filed: In this scenario, the taxpayer needs to file the return or the annual declaration, as the case may be, within seven months of the end of the first tax period. The penalty will be waived.

5. The taxpayer registered late and was issued a penalty, has not paid the penalty amount, but filed the return on time: In this scenario, no further action is required by the taxpayer. The taxpayer does not need to pay the penalty amount.

Note that the FTA may accept or reject the waiver application on a case-by-case basis. Corporate tax registration UAE and the filing of return has to be done within the stipulated time. Failure to do so will result in the disqualification of your application. 

Sample Timeline for Waiver Compliance

For businesses whose first tax year ended on 31 December 2024, the following timeline applies:

FAQs

1. Does the waiver apply to all tax violations?

No, the waiver of corporate tax penalty UAE only applies to administrative errors, such as late filing of return.

2. What if my waiver request is rejected?

You can check the response by the FTA, and raise an objection if applicable. You can also take help from tax experts to make your case strong.

Partner with AMCA to Remain Tax Compliant

The waiver policy provides relief to companies to the extent that it does not compel them to pay huge amounts in charges. Timely return filing and payment of dues prior to the specified time can be immensely helpful in availing a waiver.

Seeking professional help is a highly effective option for organizations in UAE wishing to go through the waiver procedure without any hiccups and improving their odds of being approved. AMCA can efficiently process the UAE tax penalty waiver application and assist businesses in correctly fulfilling their tax obligations.