In a move set to benefit thousands of businesses across the United Arab Emirates, companies that incurred fines for late corporate tax registration are now seeing those penalties refunded directly to their tax accounts. The UAE’s Federal Tax Authority (FTA) initiated this refund process following a key update to its registration policy announced in May 2025.
This relief comes as part of the UAE’s ongoing corporate tax implementation strategy, designed to encourage timely compliance while offering flexibility to businesses that act within the stipulated grace period.
According to the FTA, the AED 10,000 late registration penalty will either be automatically canceled or reimbursed if a company files its corporate tax return within seven months of the end of its first tax period. This applies even if the fine had already been imposed or paid.
“If a penalty has already been settled, the amount will be returned to the business’s registered tax account,”
explained Sumayya Zain, CEO of Hallmark International Auditors, Dubai.
For instance:
- A company with a financial year ending December 31, 2024, must file by July 31, 2025 to qualify.
- If the tax period ends on June 30, 2024, the return must be submitted by January 31, 2025 to meet the eligibility.
Businesses that haven’t paid the fine yet will see it waived automatically in the EmaraTax system.
The refund initiative is being especially welcomed by small and medium-sized enterprises (SMEs), for whom a Dh10,000 penalty can significantly impact cash flow. Many auditors across the UAE have already started notifying clients that the refund process is underway for eligible companies.
“This refund mechanism is extremely helpful during tax compliance transitions,”
said a Dubai-based business owner.
“Our accounting team confirmed the funds have been credited to our tax account.”
What You Need to Know About the Tax Account
All corporate tax processes in the UAE are managed via the EmaraTax portal—an official digital platform that allows businesses to register, file returns, pay taxes, and track any penalties or refunds.
To access refunds or waivers:
- Businesses must have a valid tax account on EmaraTax.
- Returns must be filed within 7 months from the end of their financial year.
- The system processes refunds or waivers automatically, with no additional application required.
Why This Matters
This policy update marks a significant step in the UAE’s business-friendly tax rollout, balancing enforcement with leniency. It offers an incentive for companies to remain compliant without harsh penalties, especially as corporate tax becomes a normalized part of the country’s regulatory framework.
As the UAE continues its journey toward economic diversification and tax transparency, businesses are urged to stay informed, file on time, and leverage government-enabled systems like EmaraTax to manage compliance efficiently.
