UAE Offers Corporate Tax Fine Waiver: Relief Measures Explaine

The UAE Federal Tax Authority has announced a conditional waiver of AED 10,000 for late corporate tax registration, applicable from 1 June 2023 onward. 

Businesses operating in the UAE now have a time-bound opportunity to eliminate or recover penalties imposed for late corporate tax registration. The UAE Federal Tax Authority (FTA) issued a public clarification in July 2025 detailing the eligibility and process for availing a waiver on the AED 10,000 (US$2,722.5) fine for missing the registration deadline under the new corporate tax regime introduced in 2023.

This initiative, originally launched on 2 May 2025, aims to reduce the compliance burden on businesses, particularly small and medium-sized enterprises (SMEs), during the country’s shift to a formal tax structure.

Eligibility for availing the waiver

The waiver is available to both individuals and juridical persons required to file a corporate tax return in the UAE. The Persons that may benefit from this initiative include:

• Entities that register as taxable but later form or join a tax group;
• Qualifying Public Benefit Entities (as listed in Cabinet Decision No. 37 of 2023);
• Qualifying Investment Funds initially registered as taxable but later granted exemption;
• Public and private pension or social security funds that eventually secure exemption; and
• UAE-incorporated juridical persons wholly owned and controlled by an exempt entity.

These categories must submit their tax return or, where applicable, an annual declaration within seven months from the end of their first tax period or financial year. Even if a late registration penalty has already been assessed or paid, businesses may still qualify for relief by meeting specific conditions.

The seven month compliance window

To secure the waiver, businesses must file their corporate tax return, or, for exempt entities, the annual declaration, within seven months from the end of their first tax period or financial year.

This shortens the usual nine-month deadline for returns but unlocks the benefit of penalty relief. Importantly, businesses that have not yet registered must complete registration before filing returns in order to benefit.

The FTA’s EmaraTax platform is the designated system for completing registrations, filing returns, and requesting refunds.

What the waiver does and doesn’t cover

The waiver only applies to late registration penalties for the first tax period. It covers penalties incurred on or after 1 June 2023 and is effective from 14 April 2025.

This initiative does not alter the timeline for settling the actual corporate tax due, which remains nine months after the end of the tax period. Companies must still ensure timely payment of their liabilities, separate from registration compliance.

Practical scenarios for businesses

The FTA outlined several scenarios to explain how the waiver applies in practice:

Unpaid penalty, return filed on time:
If the AED 10,000 penalty has been issued but not paid, and the return is filed within the 7-month window, the penalty is simply removed from the company’s EmaraTax account.

Paid penalty, return filed on time:
If the penalty has already been paid and the return is later submitted on time, the AED 10,000 will be credited to the firm’s EmaraTax account. This credit can be used to settle future tax liabilities or refunded upon request.

Registration not yet completed:
If no registration has been submitted, the business must complete it and then file the return or declaration within the 7-month window to qualify for waiver.

Reconsideration requests rendered moot:
If a company has requested a review of the fine but qualifies under this waiver, the request is nullified, and the penalty is addressed through this initiative.

Previously approved reconsiderations:
If the fine has already been waived through other means, the company cannot benefit again under the May 2025 initiative.

For example, consider a business with its first tax period running from 1 January to 31 December 2024. Without the waiver, its corporate tax return would be due by 30 September 2025. But by filing the return by 31 July 2025, within seven months of the tax period’s end, the company becomes eligible to have its AED 10,000 late registration penalty erased.

If the fine had already been paid, the credited amount would appear in the company’s EmaraTax account.

Administrative details and business strategy

Businesses must use the EmaraTax platform to submit registration applications, tax returns, or annual declarations. Those considering filing soon are advised to act promptly, as any delay beyond the 7-month mark could forfeit the waiver opportunity.

Firms operating as part of a tax group should pay close attention to their formation date and first tax period, as waivers for group members also hinge on those details.

This waiver initiative signals a flexible approach by UAE authorities to support businesses during the corporate tax transition. It eases immediate cash flow pressure and encourages formal compliance across sectors.

For SMEs and businesses that faced challenges adapting to the new regime, the ability to recover or eliminate a substantial AED 10,000 cost per entity is a timely relief.

Tax and finance professionals advising clients in the UAE should review their portfolios to identify clients who might benefit and ensure necessary filings are made before the eligibility window closes.

In brief

The UAE’s corporate tax fine waiver is a strategic opportunity for businesses to correct course without financial penalty, provided they act within the defined timeframe. With the FTA’s July clarification, the firm can file the return or declaration within seven months of the first tax period’s close, and the administrative penalty can be avoided or refunded.

See also: Oman’s Personal Income Tax Begins in 2028, Signaling Major Fiscal Shift 

• Previous Article UK-Qatar Economic Ties: Trade, Partnerships, Business Opportunities
• Next Article