The Federal Tax Authority (FTA) has launched a landmark penalty waiver initiative in 2025, offering UAE businesses a critical opportunity to avoid or recover administrative fines, including the AED 10,000 penalty for late Corporate Tax registration.
To qualify for the FTA penalty waiver and refund in 2025, businesses must submit their first Corporate Tax return or annual declaration within 7 months from the end of their first tax period. For example, if your financial year ended on 31 December 2024, the deadline to file is 31 July 2025. Meeting this deadline allows eligible businesses to waive unpaid penalties or claim a refund for the AED 10,000 late registration fine, credited to their FTA tax account.
At Excellent Accountants, we break down this important development to help you understand the eligibility criteria, steps to benefit from the relief, and how our expert tax support can ensure you stay compliant — without the financial burden.
What Is the FTA Penalty Waiver 2025?
Announced in April 2025, the FTA’s new initiative is part of the UAE government’s ongoing efforts to support businesses in adapting to the Corporate Tax regime, introduced in 2023. It allows companies to avoid or recover fines related to late registration and non-compliance provided they act within a set grace period.
This waiver complements earlier efforts like VAT penalty reconsiderations and administrative updates with no fines all aimed at making tax compliance simpler.
Who Can Benefit from the Penalty Waiver?
The initiative targets:
- Taxable Persons: Companies required to register for Corporate Tax under UAE law.
- Exempt Entities: Those exempt from Corporate Tax but required to submit an annual declaration (e.g., certain free zone companies, public benefit organizations).
- Businesses yet to register or those that registered after the deadline.
Key Waiver Condition
To qualify for the AED 10,000 penalty waiver:
Businesses must submit their first Corporate Tax return (or declaration, in the case of exempt entities) within seven (7) months from the end of their first tax period.
Whether you’ve already paid the fine or are at risk of incurring it, timely submission can secure either a waiver or refund.
Real-Life Scenarios: Will You Get the Waiver?
Here’s how the waiver works in different cases:
| Scenario | Condition Met? | What Happens? |
|---|---|---|
| Registered late, penalty issued but not paid, return submitted on time | ✅ | Penalty will be waived |
| Penalty issued, return not yet submitted | ⚠️ | Submit return within 7 months to avoid the fine |
| Penalty paid, return not yet submitted | ⚠️ | Submit return within deadline to receive refund |
| Penalty paid, return already submitted | ✅ | Full refund credited to your FTA tax account |
| Not registered yet | ⚠️ | Register and file return within deadline to waive penalty |
💡 Note: Refunds are typically processed within 90 business days and are credited to your FTA account. Cash refunds are available for deregistered entities.
What About VAT Penalties?
If your business is dealing with VAT-related fines, the FTA also offers a reconsideration mechanism, subject to:
- No evidence of tax evasion
- Genuine reason for non-compliance (e.g., illness, system error)
- Supporting documentation in Arabic
- Application submitted within 20 business days of the penalty notice
Our team at Excellent Accountants can assist you in preparing and submitting VAT reconsideration requests to improve your chances of approval.
How to Apply Through EmaraTax
All actions should be completed on the EmaraTax platform:
- Register for Corporate Tax (if not yet done)
- Submit your first tax return or annual declaration
- For refunds, track your tax account and initiate the request if needed
- For VAT or admin penalties, file a Reconsideration Request with supporting documents
Why This Waiver Matters for Your Business
The 2025 FTA Penalty Waiver offers significant benefits:
- 💰 Save AED 10,000 or more in penalties
- ✅ Avoid disruptions in your tax account due to non-compliance
- 📈 Maintain financial health with improved cash flow
- 🔍 Demonstrate compliance to stakeholders and regulatory bodies
- 🔁 Simplify your future filings with accurate records and expert help
Act Before the Deadline
Your eligibility for the waiver depends on when your first tax period ends. For many businesses in the UAE with a financial year ending on 31 December 2024, the 7-month deadline falls on 31 July 2025.
That means you need to:
- Register
- Submit your return or declaration
- File for refund (if applicable) before that date.
Why Choose Excellent Accountants?
With extensive experience in UAE tax compliance and FTA approved Tax consultancy, Excellent Accountants offers:
- 📋 Corporate Tax registration & filing
- 🧾 VAT returns & reconsideration support
- 🛠️ EmaraTax account setup & monitoring
- 💼 Ongoing tax consultancy & financial reporting
We’re committed to helping UAE businesses stay compliant, save money, and thrive in a rapidly evolving tax environment.
Ready to Claim Your Tax Relief?
Don’t risk miss the opportunity. Contact Excellent Accountants today to:
- Assess your eligibility
- File your Corporate Tax return
- Apply for refunds or penalty waivers
- Get ongoing compliance support
👉 Visit our website or call us to schedule your free consultation.
