The FTA has announced that fines and penalties for corporate tax non-compliance will be enforced in the UAE. Starting from August 1, 2023, companies failing to comply with corporate tax regulations will face penalties.
In the UAE, businesses must follow corporate tax laws to avoid fines and penalties. This requirement applies to all companies in the UAE, whether they operate on the mainland or in free zones. To evade corporate tax penalties in the UAE, companies must register for corporate tax and ensure timely payments.
Penalties For UAE Corporate Tax
As of June 1, 2023, Corporate Tax was introduced in the UAE, prompting businesses to prepare for the implications of this adjustment. Non-compliance with the Corporate Tax regulations set by the Federal Tax Authorities and the Ministry of Finance would result in the imposition of fines and penalties.
| No. | Description of Violation | Administrative Fine Penalty Amount in AED |
| 1 | Failure to keep records and information up to date | AED 10,000 for each infraction, AED 20,000 for repeated offenses within 24 months of the last violation |
| 2 | Failure to provide tax-related information in Arabic | AED 5,000 |
| 3 | Late submission of deregistration application | AED 1,000 for late submission, up to AED 10,000 each month |
| 4 | Failure to alert the Authority of any situation necessitating a revision of Tax record information | AED 1,000 for each violation, AED 5,000 for repeated violations within 24 months of the previous violation |
| 5 | Legal Representative’s failure to send out appointment notifications | AED 1,000 |
| 6 | Non-filing of tax returns by the legal representative | For the first 12 months, AED 500 for each full or partial month. Starting with the thirteenth month, AED 1,000 for each month or part thereof |
| 7 | Non-submission of tax returns by the Registrant | AED 500 for each full or partial month throughout the first 12 months. AED 1,000 for each month or part of a month after the thirteenth month. Penalties begin the day after the deadline for filing a tax return and are assessed monthly after that |
| 8 | Failure to correct tax return before the Corporate Tax Law deadline for submission | AED 500, AED 1,000 if not corrected by the deadline |
| 9 | Voluntary Disclosure (errors in Tax Return, Assessment, or Refund) | From the due date until the voluntary disclosure, there is a 1% monthly penalty on the Tax Difference |
| 10 | Failure to submit Voluntary Disclosure (before Tax Audit) | The tax difference is fixed at 15%. From the deadline until the issuing of the voluntary disclosure or tax assessment, 1% of the monthly tax difference is required |
| 11 | Failure to offer facilitation to the Tax Auditor | AED 20,000 |
| 12 | Late submission of Declaration | For the first 12 months, pay AED 500 monthly. From the thirteenth month onward, pay AED 1,000 monthly. |
To avoid such penalties, every business needs to complete the registration process for Corporate Tax promptly and ensure the proper submission of the required documents.
UAE announces penalty for late Corporate Tax Registration
On March 1, 2024, as per Cabinet decision No.10 of 2024, there is an additional penalty of AED 10,000 for companies that do not register within the stipulated time and delay in filing corporate tax returns by the Federal Tax Authority’s Deadline.
How do you avoid corporate tax fines and penalties in the UAE?
Businesses and corporations subject to corporate tax law must prioritize compliance with regulations and requirements to prevent the imposition of administrative penalties. Staying informed about updates and modifications in tax laws is important for maintaining financial well-being and legal adherence. For any specific queries or apprehensions regarding corporate tax penalties in the UAE, feel free to reach out to us at Auditac International.
Corporate Tax Services in UAE
Auditac International stands out as a premier accounting and audit firm in the UAE, providing exceptional corporate tax services. Our commitment lies in delivering the best and most timely corporate tax solutions to our clients. With our expertise, we ensure that businesses not only comply with corporate tax laws but also stay well-informed about all the developments in the corporate tax landscape.
