You managed to actually build something. The missing deadline that you only sort of noticed is costing you AED 10,000. Before writing the cheque, READ THIS.
Over 543,000 firms have now signed up for corporate tax in the UAE, Dubai Chambers reported, and most have probably learned the hard way what it's like to contend with unfamiliar tax deadlines, a myriad of new forms to complete and an abrupt cut off point with far less time to get to grips with a radical new system than was generally expected. So now that a lot of businesses are in the unpleasant position of being in default and being threatened with fines by the Federal Tax Authority (FTA), here are a few things to bear in mind. You're in no way an unusual or aberrant organisation in your predicament, and there are perfectly normal, conventional ways to address the current situation.
The Federal Tax Authority (FTA) has announced the Tax Waiver Initiative to assist businesses in their transition. The terms and conditions are that businesses must be aware of the waiver initiative and that the waiver request is made in accordance with these terms and conditions. This guide sets out the fine that businesses should be aware of, who is eligible for the waiver, and the steps that need to be taken in order to make and get approval for the waiver request via EmaraTax and benefit from the tax relief. It is possible to apply for the waiver even though the fine has been paid.
What Is the AED 10,000 Corporate Tax Penalty and Who Does It Apply To?
The new AED 10,000 fine was imposed by the Ministry of Finance when it amended the Corporate Tax Law. The amendment is aimed at increasing the federal revenues by penalizing late paying companies. One of the main components of the amendment is the imposition of a fine on companies who fail to settle their dues within 30 days from the due date.
Under Cabinet Decision No. 75 of 2023 was published on the UAE Federal Tax Authority's website on 12th August 2023. The decision outlines the penalties for non-compliance with the Corporate Tax laws and regulations. A penalty of AED 10,000 has been imposed in the event of failure to submit a Corporate Tax application as required by the FTA.
It is not a penalty for being dishonest or trying to avoid the process. The FTA confirmed that the period was administrative.
Who Is Affected?
The penalty applies to several categories of businesses:
- Taxable persons: Companies with an annual turnover above AED 375,000 or otherwise defined such as foreign ownership, high costs or sectors like gas, oil and property.
- Exempt persons are entities that are exempt but must be registered and annually report on their situation.
- Free zone entities: businesses operating in UAE free zones that meet taxability thresholds Identifying Taxable Persons: Free Zone Entities: Businesses Operating in UAE Free Zones that Meet Taxability Thresholds: The free zone entities that are considered taxable persons are those that carry out economic activities in the UAE through their branches, subsidiaries or offices. Free zone entities carrying out business through a branch or office located in a free zone in the UAE will be considered taxable persons if their annual turnover
- Tax group members: entities that form part of a consolidated tax group
The penalty for not lodging the Corporate Tax registration application on time was triggered in the following circumstances: You failed to lodge the application in time as required by the FTA. The time required was generally within the first 9 months of the first tax period.
It's not always about timing. Our client's business was not unique in that they had been engaged in preparation work such as company registration, opening bank accounts and the provision of a large amount of statutory information at the same time. None of this information was directly related to taxation, and therefore Corporate Tax was all new.
The Good News: The FTA Has a Waiver Program
The Federal Tax Authority (FTA) has launched a waiver of administrative penalties for late Corporate Tax registration application submissions. The FTA has launched the waiver to support businesses in the UAE, as part of efforts to help them get on track and avoid any penalties that may have arisen due to uncertainty during the transition period.
- Effective date: 14 April 2025
- Retroactivity: The waiver only applies to penalties arising from or after 1 June 2023, as stated in the notice.
The following are the key elements to this program that make it meaningful: The waiver is considered to be AUTOMATIC. No request for reconsideration of penalty is needed, nor is a penalty waiver form required. If all of the elements are met, and if the application is properly filled out, the FTA computer system will waive the penalty. This is different from the past procedures which required an appeal and paperwork to get a penalty waiver. This new procedure is more efficient and less complicated.
Do You Qualify? The Three Conditions You Need to Meet
Waiver for COVID-19 Tests Available for select Travelers PLEASE NOTE: This COVID-19 testing waiver is not applicable to all travelers. To be eligible, the traveler must meet specific requirements.
Condition 1: You Are a Taxable Person or Qualifying Exempt Entity
Who is a taxable person A taxable person is any business or entity that has an annual turnover that is higher than AED 375,000, foreign-owned or controlled, high costs of supply even if the turnover is less than the threshold, or fall under one of the designated sectors. Qualifying exempt entities include:
- Government bodies and authorities
- Some financial institutions and activities
- Some non-profit organisations
- Charities and associations
- Other exempt entities that have been designated by the FTA
Not all exempt persons are excluded from EmaraTax. Please check the dashboard to confirm. If the status is Taxable Person, you will need to account as a taxable person.
Condition 2: You Filed (or Will File) Within the Required Timeframe
New taxable persons must submit the Tax Return within seven months at the latest after the commencement period has expired. The Swedish Tax Agency decides on the commencement period for new taxable persons. The commencement period is mainly based on the annual sales, which determine whether the taxable person is classed as a small business, subject to ordinary business taxation or a tax period corresponding to the annual accounting period. However, in practice a tax period corresponding to the annual accounting period will usually apply to new taxable persons. If the tax period ends on 31 December 2023, the return shall be submitted by 31 July 2024 at the latest.
The period for both the exempt annual and annual ordinary resident declarations will remain the same as 7 months. In this case, the taxpayer will have an annual declaration instead of a tax return.
Late by just one day and you'll be bumped from the automatic waiver list. But don't worry, we've got some reconsideration options we'll cover further down.
Condition 3: All Submissions Must Be Completed Through EmaraTax
No manual or email filings are accepted. All corporate tax filings must be completed on the EmaraTax platform which can be accessed through emara.tax. This is an online, centralised system that provides a full audit trail of all transactions. whilst IT issues do occur they should not be a reason for not attempting to complete your online return. As there is no opportunity to make alternative submissions in the event of a system failure at the time of submission, you will have to try again at a later date.
I have already paid the fine of AED 10,000? Yes, you may be eligible for a refund of the fine amount. The fine amount will be credited in your EmaraTax account and you can either use it to offset your future tax obligations or get it directly credited to your bank account. You are required to submit the qualifying return or declaration and confirm that the waiver has been applied. The FTA will then process your refund request within 30 to 45 working days.
Step-by-Step: How to File on EmaraTax and Claim the Waiver
Follow these steps in sequence. If something goes wrong, this will help you to identify which step it occurred in.
Step 1: Log Into EmaraTax via UAEPass
Go to emara.tax and select the authentication method as UAEPass. You will require your UAE ID number and will need to have a UAEPass account. This would require you to first create a UAEPass account, which would take no more than 5-10 minutes to set up. Head to uaepass.ae to get started.
We recommend that you view this website from a computer (such as a desktop or laptop). While we have tried to make the mobile version as user friendly as possible, it is generally easier to upload documents from a computer.
Step 2: Navigate to Your Corporate Tax Dashboard
Once you are logged in you can view your full tax profile by navigating to the Corporate Tax section. If you have not yet registered for Corporate Tax you will see a button to "Register for Corporate Tax". You will not be able to proceed to file your return until you are registered.
Step 3: Confirm Your First Tax Period Dates
The system will then prompt you to confirm the first tax period. For the majority of UAE entities the first tax period will be 1 January 2023 to 31 December 2023. If you have a different financial year (for example 1 April to 31 March), you will need to confirm the relevant tax periods for your business. Getting this wrong could lead to penalties and a lot of administration to rectify.
Step 4: Upload Your Required Documents
The items listed below must be submitted for your first CT registration and return: CT1 form, completed in full, together with: A copy of the customs declaration; A copy of the air waybill or the shipping invoice and commercial invoice for sea freight; and A copy of the airline's or carrier's receipt of the air waybill or the consignment note.
- Trade License (current and valid)
- Memorandum of Association and/or Articles of Association
- Audited Financial Statements – First Tax Period We will require audited financial statements for the first tax period following your incorporation or a letter from the Canadian Revenue Agency confirming that an audit was not required.
- Ownership and control documentation showing your ultimate beneficial owners
- Three to six months of bank statements showing business activity
- Supporting schedules for inventory, receivables, payables, and fixed assets where material
You can upload your documents as PDFs or scans. Individual document files must not be larger than 25MB. All fields must be filled in. Please assign a relevant name to each document type. For example, "Trade_License_2024.pdf" is more suitable than "Document_1.pdf" because the FTA system treats the file name literally.
Step 5: Fill Out Your Corporate Tax Return or Annual Declaration
For Taxable persons:
- Income calculation
- Corporate Tax Return: Calculation of tax liability at a rate of 9% on taxable income exceeding AED 375,000 after allowing for any eligible exemptions, if required to do so by the Ministry, and payment of instalments
For Exempt persons:
- Annual Declaration: to confirm the exemption and to outline the commercial activities undertaken during the year
Data validation will occur on the submission page and submission will be blocked if required fields are left blank or contain duplicate values. No fields can be left blank. For example, if a field is not applicable, enter 0 or N/A. Submissions will not be recorded if fields are left blank.
Step 6: Review and Submit
Please verify the penalties in the Check your penalties section before submitting. If you are eligible for a waiver, the AED 10,000 penalty will show as Waived. Please note that after submission, you may want to capture and keep a record of your Filing Reference Number (FRN) in case the FTA requests for it.
Processing time: 5 to 10 business days Once we receive your filing, we will email you when it is processed by the FTA or if the FTA needs additional information.
Step 7: Check Your Penalties Section Two to Three Days After Filing
Log back in and navigate to "My Penalties" or "Compliance Status."
If the waiver is processed correctly for the AED 10,000 the text should change to "Waived" and nothing else needs to be done. If the penalty is still listed as "Outstanding" or "Payable", then one of the following may be true:
- You did not meet the conditions listed above
- There is a technical issue with the system that the FTA will correct and let you know when they do
- The penalty was not waived because of some additional information that was required. The FTA will advise what information is required and give you 30 days to resubmit
Step 8: If You Already Paid, Submit a Refund Request
You will need: EmaraTax account
- Log in to EmaraTax
- Go to My Payments
- Select the payment that you wish to request a refund for
- Click on Request Refund and add a brief description for the refund request by mentioning the waiver
- The refund will be credited to your EmaraTax account within 30 to 45 working days
- You can use this credit to offset any future tax liabilities or request a bank transfer
- The bank transfer may take 60 to 90 working days as opposed to 30 to 45 working days for the account credit
As you start to prepare your tax return, we would like to remind you that it is a good idea not to submit your EmaraTax return on the actual tax deadline date. The EmaraTax system is expected to be under a heavy load for weeks leading up to tax deadlines. Filing earlier, by at least a week, will help minimize the risk of timeout messages, system slow performance or error messages. Ideally, you should try to file your tax return in the first or second week before the tax deadline.
What If You Missed the Filing Window?
In the case of Corporate Tax, where the tax return or annual declaration is submitted more than seven months after the end of the first tax period, the automatic waiver will not apply and the AED 10,000 fine will have to be paid unless there are exceptional circumstances.
Using our previous example: if your first tax period ended 31 December 2023 and you lodged your return on 1 August 2024 or later you are now outside the automatic waiver period.
Reconsideration Requests: Your Secondary Path
The FTA may, but is not required to, consider a Reconsideration request when the petitioner presents compelling evidence of extenuating circumstances that can be fully supported with documentation. The following are examples of such circumstances:
- System failure: documented evidence that EmaraTax was inaccessible during your filing window
- Force majeure events: This contract and all of your obligations under it can be terminated if you consider that one or more of the following force majeure events are occurring or will occur within your reasonable control: Event 1: serious illness or injury that prevents you from carrying out substantial work or normal daily life Event 2: your company is dissolved Event 3: you are threatened with or are the subject of proceedings that are expected to continue for an unreasonable period
- FTA first-time filing error: Genuine misunderstanding of when FTA deadlines apply. This is a difficult to detect error and therefore is not usually successful. However, in the case of a first-time filing, the CRA may choose to accept the error and correct it themselves.
- Error by my tax advisor: If a tax advisor made the error and you have proof in writing that you relied on their advice, then the answer is yes. Try to determine who was at fault and document any advice given by the advisor.
To proceed with filing a complaint, taxpayers have to log into EmaraTax, navigate to the Penalties section and then click on Request Reconsideration. All key documents such as exact screenshots, email chains etc. have to be attached to the explanations of the points of contention. In case the dispute is related to illness, medical certificates have to be attached as well. When explaining the events in dispute, taxpayers are requested to remain neutral and to the point, avoiding emotional or argumentative wording. The whole process generally takes between 30 to 60 working days. Based on our experience, redress of what are essentially administrative errors, made by the taxpayer in good faith, is possible and ranges between 40 to 50 percent of cases.
You will need a UAE corporate tax expert. They will be able to advise on the expected timeframes for the process, the rules and procedures for making a FTAC request, the prospects of success for your business and the documentation and approach required to make a successful application. They will be able to quickly and efficiently collate and present the necessary information to maximise the chances of approval on a first submission, thereby reducing the risk of the application being rejected and the inevitable disappointment and wasted time of having to start the process over again.
Frequently Asked Questions
Does this waiver apply to free zone companies?
Almost. Free zone companies that fall under the new corporate tax under the UAE federal law will qualify. Certain free zones may also have their own tax rules or exemptions that will apply. Generally, free zone companies in Dubai and Abu Dhabi will qualify but it is best to check with the relevant Free zone authority in which your company is registered (for example DMCC, JAFZA, RAK Authority etc.)
I already had a reconsideration request before April 2025. Does anything change?
The Federal Tax Authority (FTA) has confirmed that companies who submitted requests to reconsider their penalties imposed under the EmaraTax system prior to 14 April 2025 will be able to have their request re-considered under the new waiver terms. Therefore if your request was refused due to the AED 10,000 penalty, you are now eligible to apply to have your request re-considered as part of the EmaraTax waiver. We would advise that you contact the FTA through EmaraTax using your case reference number.
Can I apply the AED 10,000 credit toward my next tax bill?
Yes. A credit will be available in your EmaraTax account. You can use this to pay this year's corporate tax, VAT, or any future liabilities including next year's corporate tax. Alternatively, you can have the credit transferred to your bank account, which will take longer.
Do I need to file even if I made zero profit?
Yes. The FTA requires all taxable persons to file a Corporate Tax Return for each tax period regardless of whether the company makes a profit or a loss. A return must be submitted if there is no taxable income. Failure to submit a return will incur an administrative fine of AED 10,000.
What documents does the FTA need for the first CT return?
The following are the core set of documents that would be required for EmaraTax:
- Trade License
- MOA and/or AOA
- Audited financial statements (audit exemption letter if not audited)
- UBO documents
- 3 to 6 months of bank statements
- Schedules for Fixed Assets, Inventory, Receivables and Payables
EmaraTax will determine which set of documents required based on the entity type.
What if the FTA rejects my filing after submission?
You will receive an email and notification in EmaraTax informing you of the rejection within 5 to 10 working days with the reasons for non-compliance which may be due to the absence of required documents or that the documents provided are not adequate. You will have 30 days to resubmit the required documents. In case you resubmit the required documents within the 30 days period and you become eligible for the waiver, your eligibility will be preserved.
Late-Filing Penalties and Interest
If your return is filed late, penalties and interest will be charged. The penalty is calculated on the original amount of tax owing. It is calculated at a rate of 2% of the original amount of tax owing for the first month it is late, and an additional 1% for each month it remains late. There is no penalty charge for the second and subsequent months if the total penalty charge for these months is less than $20. The interest rate charged on outstanding taxes is determined by the Bank of Canada.
No late filing penalty will be incurred if taxpayers lodge their return within the waiver period; however a corporate tax liability will still accrue interest at the FTA rate. Taxpayers should pay this as soon as possible to avoid incurring further interest.
Where to Go From Here
We do not consider ourselves late or even late to react to Corporate Tax as we have just got used to the announcement from the Ministry of Finance on 31st May 2022. Most entrepreneurs and managers consider the announcement of the Corporate Tax as an unexpected bomb which has been thrown into business activity in the UAE. As it has been thrown, it has to be dealt with. The announcements for the imposition of the Corporate Tax have been done without any guidance or practical information. On top of it, existing regulatory requirements have not changed and business has to continue as usual. The regulation and procedures in the UAE for businesses remain highly demanding.
The FTA gets it. They established the waiver for the transition period and all we have to do is use it effectively.
Here is what to do right now:
Please note that you will need to log in to EmaraTax to confirm your corporate tax registration details including the tax periods that apply to your business.
What documents are required to register on EmaraTax? The documents required to register may vary depending on the type of entity. It is therefore recommended to gather the following, and to refer to EmaraTax for any additional documents required for the specific entity type you are registering:
General documents Required for all business types:
- Passport (front and back)
- A colour copy of a valid UAE Residence Visa (if applicable)
- Memorandum and Articles of Association (MOA) for LLCs
- Business licence (for all business types except sole proprietors)
- VAT registration certificate (if VAT is already registered)
- Proof of address in the UAE (utility bill, tenancy agreement, etc.)
- Personal tax identification number (TPIN)
You can use this page to help you fill in and submit your tax return or annual declaration. Follow the steps and the instructions given by the computer application. Do not do anything that may be open to interpretation.
Changes to penalties will be updated in your Check Your Penalties section over the next 2 to 3 business days. The late payment fee waiver should be reflected as "applied".
If you have missed the deadline please get in touch with us to discuss your options or consider submitting a reconsideration.
The waiver is real. The path is clear.
Need Professional Support?
Our company Finanshels has assisted over a hundred start-ups in the UAE with their corporate tax registration, return submissions and penalty clearance.
Book a free 20 minute Corporate Tax consultation and one of our Tax Experts will review your individual circumstances, confirm eligibility for our complimentary service and prepare you for next steps. No obligation.
