The Federal Tax Authority (FTA) of the United Arab Emirates has recently announced a significant development in its corporate tax policies. On May 7th, the FTA revealed that it will be exempting certain corporate taxpayers from administrative penalties incurred due to late submission of registration applications.
This exemption is a direct result of a decision issued by the UAE Cabinet, which aims to simplify and streamline the corporate tax registration process for businesses operating in the country. The move is seen as a significant step towards promoting transparency and voluntary compliance among corporate taxpayers.
To qualify for this waiver, eligible taxpayers must submit their Tax Return (or Annual Declaration) within seven months from the end of their first Tax Period (or first Financial Year). This timeframe has been reduced from nine months, making it easier for businesses to meet their tax obligations and avoid penalties.
However, it’s essential to note that this exemption applies only to the first tax period of the taxable person or exempted category. If a taxpayer has already paid a penalty for late registration and meets the exemption criteria, they will be entitled to a refund of the penalty amount. Similarly, registered taxpayers who filed returns before the exemption decision but were penalized for late submission will also receive a refund of the paid penalties.
Khalid Ali Al Bustani, Director-General of the FTA, has urged all unregistered corporate taxpayers to promptly submit their corporate tax registration applications and tax returns through the EmaraTax platform. He emphasized the importance of meeting the deadlines specified in the Cabinet Decision to benefit from the exemption.
The FTA’s Strategy for Tax Procedures
The Federal Tax Authority (FTA) has been actively working towards expediting tax procedures and encouraging voluntary compliance across all business sectors. Aligned with the Cabinet’s decision, the FTA’s strategy focuses on maintaining a flexible and evolving tax framework that promotes economic growth.
According to Al Bustani, widespread compliance is a crucial contributor to economic growth. The FTA remains committed to full transparency and continues to engage with businesses through various awareness channels to guide them through compliance procedures.
Growing Awareness of Corporate Tax Registration
The FTA has praised the strong registration response in Q1 2025, recording over 543,000 corporate tax registrations. This indicates growing awareness and compliance among businesses. The FTA continues to engage with businesses through various awareness channels to gather feedback and identify solutions to potential challenges.
Eligibility and Conditions for Exemption
The exemption applies to all persons subject to corporate tax registration, whether or not they have applied for registration or were penalized for delays. To qualify for the exemption, taxpayers must meet specific conditions:
- If registered and a penalty was imposed but not paid, the return (or annual declaration) must be submitted within seven months of the end of the first Tax Period (or Financial Year) to qualify for the exemption.
- If registered and the penalty was already paid, the return must also be submitted within seven months of the end of the first Tax Period to receive a refund of the penalty.
- If not yet registered, the taxpayer (or exempt person) must submit the registration application and then file the return within seven months of the end of the first Tax Period to benefit from the exemption.
Conclusion
The recent announcement by the Federal Tax Authority (FTA) regarding the exemption of certain corporate taxpayers from administrative penalties is a significant development in the UAE’s corporate tax policies. This move aims to simplify the corporate tax registration process, promote transparency and voluntary compliance among businesses, and contribute to economic growth.
By meeting the deadlines specified in the Cabinet Decision, eligible taxpayers can benefit from this waiver and avoid penalties. The FTA continues to engage with businesses through various awareness channels to guide them through compliance procedures and address potential challenges.
It is essential for unregistered corporate taxpayers to promptly submit their corporate tax registration applications and tax returns through the EmaraTax platform to meet the exemption criteria. By doing so, they can contribute to the UAE’s economic growth and comply with the country’s evolving tax framework.