The UAE’s Federal Tax Authority (FTA) has initiated a new measure that grants administrative penalty waivers to companies that missed the deadline to register for corporate tax—provided they file their returns within a specific grace period. This change follows the implementation of a UAE Cabinet Decision aimed at supporting businesses during the first year of corporate tax enforcement.
New Compliance Grace Period Announced
Businesses that failed to register for corporate tax on time now have a chance to avoid penalties by submitting their tax returns no later than seven months after the end of their first financial year. This policy is a one-time provision applicable only to the first tax period, regardless of whether the original registration deadline was missed before or after this ruling was introduced.
“The Cabinet Decision aims to make compliance easier and support the UAE’s goal of a transparent, flexible tax environment,”
said Khalid Ali Al Bustani, Director-General of the FTA.
This initiative is part of a broader strategy to streamline tax procedures and encourage voluntary adherence to the UAE’s new corporate tax framework.
Who Can Claim the Waiver?
According to the FTA official statement, the waiver applies in the following scenarios:
- Unregistered businesses that submit both their registration and tax return within the seven-month window.
- Registered businesses that were fined for late registration but file their return within the new timeframe.
- Entities that paid a fine for late filing—even before the waiver announcement—are also eligible for a refund, which will be credited to their FTA tax account.
This relief also extends to exempt organizations that are legally obligated to register for corporate tax purposes.
FTA Urges Immediate Action via EmaraTax
Businesses have been instructed to complete all registration and tax return formalities through the EmaraTax platform . Failure to act within the stipulated time may result in forfeiting the waiver and facing penalties as per earlier regulations.
“We urge all businesses yet to register to take swift action and avoid unnecessary fines,” added Al Bustani.
More than 543,000 companies have already registered for corporate tax as of Q1 2025, indicating significant traction across sectors. The FTA continues to engage business communities through workshops, guides, and digital outreach to promote awareness and facilitate smoother compliance.
The standard corporate tax in the UAE is 9% on taxable income exceeding AED 375,000. This penalty relief is especially relevant for SMEs and newly established firms navigating the tax system for the first time.By offering a practical grace period and refund mechanism, the FTA is underscoring its commitment to building a business-friendly tax regime that supports long-term economic development.For details on corporate tax registration, compliance guides, and updates on the waiver policy, visit the FTA’s official website.
