The introduction of corporate tax in the UAE has ushered in a new era of compliance for businesses. However, in an encouraging move, the Federal Tax Authority (FTA) has introduced relief measures for businesses that missed their corporate tax registration deadlines. Companies that incurred penalties for late registration can now receive refunds or have their fines waived if they meet specific criteria.
This initiative aims to ease the financial burden on businesses, especially small and medium-sized enterprises (SMEs), and incentivize compliance with tax regulations. In this article, we explore the key details of this refund program, eligibility requirements, and the steps businesses must take to benefit from the waiver.
The AED 10,000 Penalty: An Overview
Under the UAE’s corporate tax regime, businesses are required to register and file tax returns within stipulated timelines. Failure to meet the registration deadline results in a penalty of AED 10,000.
Recognizing the challenges faced by businesses, particularly during the early stages of implementing corporate tax, the FTA announced in May 2025 that late registration penalties would be automatically waived or refunded if businesses fulfill specific compliance requirements.
Major Benefits of UAE Tax Refunds
The refund and waiver initiative is governed by clear guidelines to ensure fairness and transparency. Below are the essential details:
- Automatic Waiver or Refunds:
- Businesses that missed the registration deadline can have their penalties waived if they submit their corporate tax returns within 7 months from the end of their first tax period.
- If the penalty was already paid, the amount will be refunded to the company’s tax account.
- Businesses that missed the registration deadline can have their penalties waived if they submit their corporate tax returns within 7 months from the end of their first tax period.
- Encouraging Compliance:
- The FTA’s relief measure is designed to encourage businesses to register promptly and fulfill their tax obligations without delay.
- The FTA’s relief measure is designed to encourage businesses to register promptly and fulfill their tax obligations without delay.
- Support for SMEs:
This measure is particularly beneficial for SMEs, which often operate with limited financial resources. As one SME owner remarked, “Every dirham saved counts, and this refund brings much-needed relief.”
Eligibility Criteria
To qualify for the waiver or refund of the late registration penalty, businesses must:
- File their corporate tax returns within 7 months from the end of their first tax period.
- Ensure accurate and timely submission of all required tax filings.
It is important to note that simply registering late does not qualify a business for a refund. The FTA requires that the corporate tax returns also be submitted on time
Examples of Compliance Deadlines
Case 1: January–December Financial Year
For businesses following the calendar year as their financial year:
- First Tax Period: January 1, 2024, to December 31, 2024.
- Deadline for Filing Returns: September 30, 2025 (9 months after the financial year-end).
Case 2: July–June Financial Year
For businesses with a financial year running from July 1, 2023, to June 30, 2024:
- Deadline for Filing Returns: Within 7 months of the financial year-end, i.e., by January 31, 2025.
Businesses must adhere to these timelines to benefit from the penalty waiver or refund.
How Are Refunds Processed?
The refund process is streamlined through the EmaraTax portal, the FTA’s dedicated platform for tax registration and filing.
What Is a Tax Account?
The tax account is a digital account created on the EmaraTax portal to manage all aspects of a company’s tax obligations. Key features include:
- Government Services: OTPs are essential for e-service access, visa renewals, and permit applications.
- Financial Safety: Receive transaction updates and fraud alerts without disruptions.
- Legal Compliance: UAE law mandates updates within 30 days to avoid fines.
- Smooth Communication: Maintain contact with institutions and service providers.
Refund Scenarios:
- If the penalty has already been paid, the refund amount will be credited to the company’s tax account.
- If the penalty is unpaid, it will be automatically waived in the system upon meeting the criteria.
Why This Matters for UAE Businesses
The penalty refund initiative reflects the FTA’s commitment to fostering a business-friendly environment. While the relief is temporary, it offers a valuable opportunity for companies to rectify delays in registration without incurring financial penalties.
For SMEs, this is particularly significant as managing cash flow is often a challenge. By alleviating the burden of a AED 10,000 penalty, the FTA provides much-needed support to help these businesses focus on growth and compliance.
Steps to Secure Refunds for UAE Corporate Tax Penalties
To ensure eligibility for the penalty waiver or refund, businesses should follow these steps:
- Register on EmaraTax:
- Create a tax account on the EmaraTax portal if not already registered.
- Create a tax account on the EmaraTax portal if not already registered.
- File Corporate Tax Returns:
- Submit your tax returns within 7 months from the end of the first tax period.
- Submit your tax returns within 7 months from the end of the first tax period.
- Monitor Refund Status:
- Check your tax account for updates on refunds or waivers.
- Check your tax account for updates on refunds or waivers.
- Seek Professional Assistance:
Consult a tax advisor to ensure compliance with corporate tax regulations and deadlines.
Final Thoughts
The UAE’s initiative to refund or waive late registration penalties underscores its commitment to supporting businesses during the transition to corporate taxation. However, timely compliance remains critical.
By creating and maintaining a tax account on the EmaraTax portal and adhering to filing deadlines, businesses can secure these refunds and focus on their growth strategies. For SMEs, in particular, this measure represents a vital step toward financial stability and regulatory compliance.
As the UAE continues to refine its tax framework, proactive compliance and timely registration will remain essential for businesses looking to thrive in this evolving landscape. Unicorn Global Solutions is here to help! Text us on whatsApp or call us today .
Frequently Asked Questions (FAQs)
Yes, the Federal Tax Authority (FTA) may allow a refund of the AED 10,000 penalty if you meet specific criteria and apply for reconsideration within the allowed timeframe.
The penalty for failing to register for UAE Corporate Tax on time is AED 10,000, as per Cabinet Decision No. 75 of 2023.
You must file a Reconsideration Request through the FTA e-Services portal within 20 business days from the date of penalty issuance.
You typically need:
A letter explaining the delay
Supporting documents (e.g., trade license, tax registration application)
Any technical error proof or justification
No, refunds are not guaranteed. The FTA only grants them in valid and justifiable cases, such as technical errors, system issues, or genuine unawareness during the early implementation phase.
NOTE:
The above note is subject to further study and clarification. It does not constitute a formal opinion from our end. Before making any decisions based on the above, we recommend consulting our experts on the subject.
