Waiver of Administrative Penalty for failing to submit a Corporate Tax registration application within a specified deadline - CTP006
CTP006
Corporate Tax Public Clarification
Waiver of Administrative Penalty for failing to submit a Corporate Tax registration application within a specified deadline
Issue
Corporate Tax in the UAE is regulated by Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Business and its amendments ("Corporate Tax Law"), and its implementing decisions.
Cabinet Decision No. 75 of 2023 on the Administrative Penalties for Violations Related to the Application of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, and its amendments ("Cabinet Decision No. 75 of 2023") lists an Administrative Penalty of AED 10,000 for the failure of the Taxable Person to submit a Tax Registration application within the timeframe specified by the Federal Tax Authority ("FTA") in accordance with the Corporate Tax Law.[1]
The Cabinet approved that the FTA may waive and refund (where paid) the late registration administrative penalty applicable to Taxable Persons and certain categories of Exempt Persons, subject to meeting specific conditions.
The Cabinet approval is effective from 14 April 2025, but is applicable to any Corporate Tax late registration penalty, from 1 June 2023, subject to meeting the necessary requirements.
This Public Clarification intends to explain the criteria by which Taxable Persons and certain categories of Exempt Persons can have this administrative penalty waived and, if applicable, refunded.
Summary
Persons required to register for Corporate Tax, including juridical persons intending to apply for the exemption referred to under Article 4(1)(e) to (i) of the Corporate Tax Law, may be subject to an Administrative Penalty of AED 10,000 for failure to submit a Tax Registration application for Corporate Tax to the FTA within the timeline set by the FTA ("Late Registration Penalty").
The FTA has launched an initiative to waive this Late Registration Penalty provided that a Taxable Person submits its Tax Return within seven months from the end of its first Tax Period, instead of nine months.
Persons that were subject to a Late Registration Penalty and subsequently became exempt from Corporate Tax following an application approved by the FTA, may also benefit from this waiver, if they submit their annual declaration within seven months from the end of their first Financial Year, instead of nine months.
Persons within the scope of this initiative are eligible for this waiver even if the Late Registration Penalty has already been settled. In such case, a refund shall be made by crediting the amount to the person's EmaraTax account.
This initiative only applies to the first Tax Period, whether in the past or in the future.
This initiative does not affect the deadline of when a Taxable Person must settle the Corporate Tax Payable to the FTA, which remains payable within nine months from the end of the first Tax Period.
Detailed Analysis
The analysis explains the conditions to benefit from the waiver of the Late Registration Penalty and its refund, where applicable, and provides examples to illustrate how this applies in different situations.
All Persons required to register for Corporate Tax must submit a Tax Registration application to the FTA no later than the timeline set by the FTA.[2]
This timeline has been specified in FTA Decision No. 3 of 2024, and also applies to Persons intending to apply for the exemption referred to under Article 4(1)(f) to (i) of the Corporate Tax Law.[3]
Persons that were subject to a Late Registration Penalty of AED 10,000 may be eligible to benefit from this Late Registration Penalty waiver initiative.
The Persons that may benefit from this initiative include:
a Person (natural person, juridical person or other) who is required to file a Tax Return
a Person that registers as a Taxable Person but, subsequently, forms or joins a Tax Group.
a Qualifying Public Benefit Entity that is listed in Cabinet Decision No. 37 of 2023.
an Exempt Person under Article 4(1)(f), (g), (h) or (i) of the Corporate Tax Law that initially registers as a Taxable Person but, subsequently, has its application to be exempt approved.
Where a Person within the scope of this initiative meets the conditions to benefit from the waiver i.e. it files the Tax Return within seven months from the end of the first Tax Period, or files an annual declaration within seven months from the end of the first Financial Year, as applicable, the FTA will undertake the following actions:
Where the Late Registration Penalty has not yet been paid, it will be waived and, will no longer appear as payable on the Person's EmaraTax Corporate Tax account.
Where the Late Registration Penalty has already been paid, the amount of AED 10,000 shall automatically be credited to the Person's EmaraTax Corporate Tax account.
Where the Person has submitted a request to the FTA for reconsideration in respect of the Late Registration Penalty, such request shall be considered null and void, as the Late Registration Penalty will be waived under this initiative.
Where the Person has submitted a request to the FTA for reconsideration of the Late Registration Penalty, and the reconsideration request has already been approved, i.e. the penalty has already been waived, the Person will not be eligible for a further waiver under this initiative.
Where the amount of the Late Registration Penalty is credited to the Person's EmaraTax Corporate Tax account, the Person may either leave the amount in the account towards settling Corporate Tax Payable or request a refund of such amount via EmaraTax.
Where a Tax Group, formed in accordance with Article 40(1) of the Corporate Tax Law, files its Tax Return within seven months from the end of the Tax Period, the Late Registration Penalty imposed on any member of the Tax Group shall be waived under this initiative and the amount credited, if applicable, provided that it is the first Tax Period of the member of such Tax Group.
Example 1
Company A is a Taxable Person with a first Tax Period of 1 January to 31 December 2024.
Company A fails to submit a Tax Registration application within the timeframe specified in FTA Decision No. 3 of 2024. Therefore, it is subject to a Late Registration Penalty of AED 10,000, which it has not paid.
Without the waiver initiative, Company A is required to file its Tax Return by 30 September 2025, i.e. within nine months from the end of its Tax Period.[4]
Company A submits its Tax Return on 8 July 2025, which is within seven months from the end of the Tax Period, i.e. before 31 July 2025.
Since Company A submits its Tax Return within seven months from the end of its first Tax Period, the FTA waives the Late Registration Penalty of AED 10,000 in Company A's EmaraTax Corporate Tax account, and it no longer appears as payable.
The penalty amount of AED 10,000 will not be credited to the account because the Late Registration Penalty was not paid.
Example 2
Company B is a Taxable Person with a first Tax Period of 1 June 2023 to 31 May 2024.
Company B fails to submit a Tax Registration application within the timeframe specified in FTA Decision No. 3 of 2024. Therefore, it is subject to a Late Registration Penalty of AED 10,000, which it has paid.
Without the waiver initiative, Company B is required to file its Tax Return by 28 February 2025, i.e. within nine months from the end of its Tax Period.[4]
Company B submits its Tax Return on 13 December 2024, which is within seven months from the end of the Tax Period, i.e. before 31 December 2024.
Since Company B has submitted its Tax Return within seven months from the end of its first Tax Period, the FTA waives the Administrative Penalty of AED 10,000 in Company B's EmaraTax Corporate Tax account.
The FTA refunds the penalty amount of AED 10,000 by crediting the Company B's EmaraTax Corporate Tax account.
Example 3
Company C is a Taxable Person with a first Tax Period of 1 September 2023 to 31 August 2024.
Company C fails to submit a Tax Registration application within the timeframe specified in FTA Decision No. 3 of 2024. Therefore, it is subject to a Late Registration Penalty of AED 10,000, which it has not paid.
Company C subsequently submits a request to the FTA to reconsider the Late Registration Penalty.
Without the waiver initiative, Company C is required to file its Tax Return by 31 May 2025, i.e. within nine months from the end of its Tax Period.[4]
Company C submits its Tax Return on 14 February 2025, which is within seven months from the end of the Tax Period, i.e. before 31 March 2025.
Since Company C submits its Tax Return within seven months from the end of its first Tax Period, the FTA waives the Late Registration Penalty of AED 10,000 in Company C's EmaraTax Corporate Tax account.
Company C's reconsideration request in relation to the Late Registration Penalty is now null and void, as the applicable penalty has been waived.
The penalty amount of AED 10,000 will not be credited in the account because the Late Registration Penalty was not paid.
Example 4
Company X and its two wholly owned subsidiaries, Company Y and Company Z, are Taxable Persons with a Financial Year of 1 January to 31 December 2024.
Company X submits a Tax Registration application within the timeframe specified in FTA Decision No. 3 of 2024. Therefore, it is not subject to a Late Registration Penalty.
Company Y and Company Z fail to submit Tax Registration applications within the timeframe specified in FTA Decision No. 3 of 2024. Therefore, they are each subject to a Late Registration Penalty of AED 10,000. Only Company Z paid the Late Registration Penalty.
Subsequently, Companies X, Y and Z successfully applied to form a Tax Group, Tax Group XYZ, in accordance with Article 40 of the Corporate Tax Law.
Without the waiver initiative, Tax Group XYZ is required to file its Tax Return by 30 September 2025, i.e. within nine months from the end of its Tax Period.[4]
Tax Group XYZ submitted its Tax Return on 18 June 2025, which is within seven months from the end of the Tax Period, i.e. before 31 July 2025.
Since Tax Group XYZ submitted its Tax Return within seven months from the end of its first Tax Period, the FTA waives the Late Registration Penalty of AED 10,000 for Company Y and Company Z.
The FTA refunds the penalty amount of AED 10,000 paid by Company Z by crediting Tax Group XYZ's EmaraTax Corporate Tax account.
The penalty amount of AED 10,000 applied on Company Y shall not be credited since it had not paid the Late Registration Penalty.
Example 5
Mr S is a Taxable Person with a first Tax Period of 1 January to 31 December 2024.
He failed to submit a Tax Registration application by 31 March 2025, i.e. the timeframe specified in FTA Decision No. 3 of 2024. Therefore, he is subject to a Late Registration Penalty of AED 10,000.
Mr S is required to file his Tax Return by 30 September 2025, i.e. within nine months from the end of its Tax Period.[4]
Mr S submitted his Tax Return on 1 June 2025, which is within seven months from the end of the Tax Period, i.e. before 31 July 2025.
Since Mr S submitted his Tax Return within seven months from the end of his first Tax Period, the FTA waives the Late Registration Penalty of AED 10,000 in Mr S' EmaraTax Corporate Tax account.
Example 6
Entity D, incorporated in the UAE, has a Financial Year of 1 January to 31 December 2024. Entity D is listed in Cabinet Decision No. 37 of 2023 as a Qualifying Public Benefit Entity.
Entity D failed to submit a Tax Registration application within the timeframe specified in FTA Decision No. 3 of 2024, and is subject to a Late Registration Penalty of AED 10,000.
Since Entity D is listed in the Cabinet Decision No. 37 of 2023, it is required to file its annual declaration by 30 September 2025, i.e. within nine months from the end of its Financial Year.[5],[6]
Entity D submits its annual declaration on 30 June 2025, which is within seven months from the end of the Tax Period, i.e. before 31 July 2025.
Since Entity D submits its annual declaration within seven months from the end of its first Financial Year, the FTA waives the Late Registration Penalty of AED 10,000 in Entity D's EmaraTax Corporate Tax account.
Example 7
Company E is an investment fund, established in the UAE, that meets the conditions to be a Qualifying Investment Fund under Article 4(1)(f) of the Corporate Tax Law.
Before Company E can submit an application to the FTA to be an Exempt Person under Article 4(1)(f) of the Corporate Tax Law, it is considered a Taxable Person. Therefore, it must submit a Tax Registration application within the timeframe specified in FTA Decision No. 3 of 2024.
Company E fails to do so and is, therefore, subject to a Late Registration Penalty of AED 10,000.
Subsequent to registration, Company E successfully applies to the FTA to be treated as a Qualifying Investment Fund, as per Article 4(1)(f) of the Corporate Tax Law.
Company E has a Financial Year of 1 April to 31 March 2025 and, therefore, is required to file its annual declaration by 31 December 2025, i.e. within nine months from the end of its Financial Year.[5],[6]
Company E submits its annual declaration on 21 September 2025, which is within seven months from the end of the Tax Period, i.e. before 31 October 2025.
Since Company E submits its annual declaration within seven months from the end of its first Financial Year, the FTA waives the Late Registration Penalty of AED 10,000 in Company E's EmaraTax Corporate Tax account.
Example 8
Company F is a Taxable Person with a first Tax Period of 1 January to 31 December 2024.
Company F fails to submit a Tax Registration application within the timeframe specified in FTA Decision No. 3 of 2024. Therefore, it is subject to a Late Registration Penalty of AED 10,000, which it has not paid.
Without the waiver initiative, Company F is required to file its Tax Return by 30 September 2025, i.e. within nine months from the end of its Tax Period.[4]
Company F submits its Tax Return on 18 September 2025, which is not within seven months from the end of the Tax Period, i.e. not before 31 July 2025.
Since Company F does not submit its Tax Return within seven months from the end of its first Tax Period, it is not eligible for the Late Registration Penalty waiver under this initiative.
Company F will not receive an Administrative Penalty for failing to submit a Tax Return because it filed its Tax Return within the deadline of nine months from the end of its Tax Period, i.e. 30 September 2025.
This Public Clarification issued by the FTA is meant to clarify certain aspects related to the implementation of the Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Business, and its amendments, and the implementing decisions, and Cabinet Decision No. 75 of 2023 on the Administrative Penalties for Violations Related to the Application of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, and its amendments.
This Public Clarification states the position of the FTA and neither amends nor seeks to amend any provision of the aforementioned legislation. Therefore, it is effective as of the date of implementation of the relevant legislation, unless stated otherwise.
Legislative References:
In this clarification, Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Business, and its amendments is referred to as "Corporate Tax Law", Cabinet Decision No. 105 of 2021 on the Controls and Procedures for Paying Administrative Penalties by Instalments, and Waiving and Refunding Administrative Penalties is referred to as "Cabinet Decision No. 105 of 2021", Cabinet Decision No. 37 of 2023 Regarding the Qualifying Public Benefit Entities for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses is referred to as "Cabinet Decision No. 37 of 2023", Cabinet Decision No. 75 of 2023 and its amendments on the Administrative Penalties for Violations Related to the Application of Federal Decree- Law No. 47 of 2022 on the Taxation of Corporations and Businesses is referred to as "Cabinet Decision No. 75 of 2023", Federal Tax Authority Decision No. 7 of 2023 on the Provisions of Exemption from Corporate Tax for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses and its amendments is referred to as "FTA Decision No. 7 of 2023", Federal Tax Authority Decision No. 11 of 2023 on the Requirements of Submitting a Declaration for Exempt Persons for purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses is referred to as "FTA Decision No. 11 of 2023," and Federal Tax Authority Decision No. 3 of 2024 on the Timeline specified for Registration of Taxable Persons for Corporate Tax for the purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses and its amendments is referred to as "FTA Decision No. 3 of 2024."
Article 1 of Corporate Tax Law defines the following terms as:
"Administrative Penalties" â Amounts imposed and collected under the Corporate Tax Law or the Tax Procedures Law.
"Corporate Tax" â The tax imposed by the Corporate Tax Law on juridical persons and Business income.
"Corporate Tax Payable" â Corporate Tax that has or will become due for payment to the FTA in respect of one or more Tax Periods.
"Exempt Person" â A Person exempt from Corporate Tax under Article 4 of the Corporate Tax Law.
"Financial Year" â The period specified in Article 57 of the Corporate Tax Law.
"Qualifying Investment Fund" â Any entity whose principal activity is the issuing of investment interests to raise funds or pool investor funds or establish a joint investment fund with the aim of enabling the holder of such an investment interest to benefit from the profits or gains from the entity's acquisition, holding, management or disposal of investments, in accordance with the applicable legislation and when it meets the conditions set out in Article 10 of the Corporate Tax Law.
"Qualifying Public Benefit Entity" â Any entity that meets the conditions set out in Article 9 of the Corporate Tax Law and that is listed in a decision issued by the Cabinet at the suggestion of the Minister.
"Tax group" â Two or more Taxable Persons treated as a single Taxable Person according to the conditions of Article 40 of the Corporate Tax Law.
"Tax Period" â The period for which a Tax Return is required to be filed.
"Tax Procedures Law" â The federal law that governs tax procedures in the UAE.
"Taxable Person" â A Person subject to Corporate Tax in the UAE under the Corporate Tax Law.
"Tax Registration" â A procedure under which a Person registers for Corporate Tax purposes with the FTA.
"Tax Return" â Information filed with the FTA for Corporate Tax purposes in the form and manner as prescribed by the FTA, including any schedule or attachment thereto, and any amendment thereof.