We welcome the recent decision announced on April 29th, 2025, by the UAE Ministry of Finance (MoF) and the Federal Tax Authority (FTA) regarding the initiative to waive administrative penalties for delayed corporate tax registration. This is a pragmatic and supportive step for businesses operating within the UAE.
This is a significant and positive development announced yesterday, April 29th, 2025, by the UAE Ministry of Finance and the Federal Tax Authority. The decision to waive administrative penalties for late corporate tax registration, under specific conditions, is a proactive measure aimed at supporting businesses during this crucial first year of Corporate Tax implementation.
Alan Dorgan, Senior Associate Tax and Advisory, commented on the initiative:
“This is a very welcome and pragmatic decision by the Ministry of Finance and the FTA. It demonstrates a clear understanding of the initial challenges businesses might face adapting to the new Corporate Tax regime. Waiving penalties for late registration, provided the first return or statement is filed within seven months of the end of the first tax period, significantly eases the pressure and potential financial burden on companies, especially during this bedding-in phase. It’s a positive signal that encourages substantive compliance and focuses on getting businesses integrated into the system smoothly, rather than penalising administrative delays early on.”
Key takeaways from the announcement:
- Target Beneficiaries: The waiver applies to corporate taxpayers and certain exempt persons who failed to submit their tax registration applications on time.
- Condition for Waiver: To qualify, eligible entities must file their tax return or annual statements within seven (7) months from the end of their first tax period. This is a crucial deadline to benefit from the waiver.
- Objective: The initiative aims to enhance overall tax compliance by encouraging timely filing of the first return/statement, even if the initial registration was delayed. It’s designed to ease financial burdens and support businesses.
- Refunds: The FTA will proactively refund administrative penalties already collected from businesses that meet the waiver criteria.
- Broader Impact: This move underscores the UAE government’s supportive approach towards the business community, aiming to foster voluntary compliance and enhance the country’s competitive standing.
In essence, this decision provides a valuable grace period related to registration penalties, contingent on timely compliance with the first filing obligation under the Corporate Tax law. Businesses that may have missed the initial registration deadlines should ensure they meet the subsequent filing requirements within the specified seven-month window to take advantage of this relief measure.