UAE Corporate Tax Penalties

The United Arab Emirates (UAE) introduced corporate tax through Federal Decree-Law No. 47 of 2022, bringing a major shift in business operations. To ensure compliance and transparency, the UAE government has established administrative penalties for businesses that fail to meet tax obligations.

These penalties are designed to encourage businesses to register on time, maintain proper records, file returns accurately, and pay taxes promptly.

In this blog, we break down all corporate tax penalties, explain what they mean in simple language, and provide a quick-reference table for easy understanding.

Why Corporate Tax Compliance Matters

Following corporate tax regulations is important for several reasons:

• Protects business reputation: Non-compliance may affect your credibility with investors, banks, and partners.
• Avoids financial loss: Repeated violations can lead to significant fines.
• Legal responsibility: UAE tax laws are enforced strictly under federal decrees.
• Supports the economy: Timely tax compliance strengthens the UAE’s financial ecosystem.

Cabinet Decisions Behind Corporate Tax Penalties

Two key decisions govern corporate tax penalties:

1. Cabinet Decision No. 75 of 2023 – Outlines administrative penalties for violations related to corporate tax. Effective 1 August 2023.
2. Cabinet Decision No. 10 of 2024 – Introduces AED 10,000 penalty for late corporate tax registration. Effective 1 March 2024.

The combination of these decisions forms the complete penalty framework for 2025.

AED 10,000 Penalty for Late Corporate Tax Registration

On February 27, 2024, the UAE Ministry of Finance announced that businesses failing to register for corporate tax within the specified timelines would face an AED 10,000 fine.

Key Points:

• This penalty aligns with late registration fines for VAT and Excise Tax.
• The fine encourages businesses to register promptly and avoid unnecessary penalties.
• Effective from March 1, 2024, under Cabinet Decision No. 10 of 2024.

UAE Corporate Tax Penalties: Detailed Table

Here’s a clear table of corporate tax penalties based on Cabinet Decisions 75/2023 and 10/2024:

No.	Violation	Penalty	Notes
1	Failure to keep required records and information	AED 10,000 per violation	Repeat violations within 24 months: AED 20,000
2	Failure to provide documents in Arabic when requested	AED 5,000	Applies to requested invoices, ledgers, or statements
3	Failure to submit deregistration application on time	AED 1,000 per month, up to AED 10,000	Applies until application is submitted
4	Failure to update tax records	AED 1,000 per violation	Repeat violations within 24 months: AED 5,000
5	Legal Representative failing to notify appointment	AED 1,000	Paid from Legal Representative’s own funds
6	Legal Representative failing to file tax return	AED 500/month (first 12 months), AED 1,000/month (from 13th month)	Paid from Legal Representative’s own funds
7	Failure to file corporate tax return on time	AED 500/month (first 12 months), AED 1,000/month (from 13th month)	Penalty starts day after submission deadline
8	Failure to pay taxes on time	14% per annum, calculated monthly	For voluntary disclosure: 20 business days from submission; for tax assessment: 20 business days from receipt
9	Submitting an incorrect tax return	AED 500	If corrected before submission deadline, no penalty
10	Voluntary disclosure errors	1% monthly penalty on tax difference	From day after due date until disclosure submitted
11	Failure to submit voluntary disclosure before audit notification	15% fixed penalty + 1% monthly on tax difference	If disclosure made after audit, penalty accrues from original due date until submission
12	Failure to facilitate Tax Auditor	AED 20,000	Paid by taxpayer, Legal Representative, or Tax Agent as applicable
13	Failure to submit Declaration on time	AED 500/month (first 12 months), AED 1,000/month (from 13th month)	Monthly penalty applied on the same day; if month lacks date, use last day of month
14	Late corporate tax registration	AED 10,000	Introduced under Cabinet Decision 10/2024, effective 1 March 2024

How Monthly Penalties Are Calculated

Some penalties are charged monthly. Key rules:

• If a penalty is to be imposed on the same date each month but the month does not have that date (e.g., 31st), the last day of that month is used.
• In other months, the penalty is applied on the same day it was first imposed.

This ensures penalties are applied consistently.

How to Avoid Corporate Tax Penalties

Preventing penalties is easier than paying them. Here’s how:

1. Register on Time – Submit your corporate tax registration before the FTA deadline.
2. Maintain Proper Records – Keep invoices, contracts, payroll, and financial statements.
3. File Returns Early – Plan ahead and submit before the nine-month deadline after your financial year-end.
4. Pay Taxes Promptly – Use the FTA online portal to avoid late payment penalties.
5. Use a Tax Consultant – Professional advice ensures compliance and prevents mistakes.
6. Respond Quickly to FTA Requests – Whether audits, documentation requests, or clarifications, timely response avoids fines.

Final Thoughts

The UAE’s corporate tax system is designed to be simple, transparent, and fair. However, penalties for non-compliance are strict. From AED 500 monthly fines to 14% annual penalties on unpaid taxes, ignoring deadlines can quickly become costly.

By understanding all corporate tax penalties and taking proactive steps—like registering on time, maintaining proper records, and filing accurately—businesses can stay compliant, avoid fines, and focus on growth.

The AED 10,000 penalty for late registration, introduced in 2024, highlights the UAE’s commitment to timely compliance. Businesses that act early are rewarded with peace of mind and long-term benefits.

For the financial year 2024, the deadline for Corporate Tax registration and filing is September 30, 2025. To ensure timely compliance and avoid penalties, contact the best tax consultancy, such as Excellent Accountants.

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