UAE Introduces Dh10,000 Fine for Late Corporate Tax Registration

The Ministry of Finance has announced a new fine of Dh10,000 for late registration in corporate tax, set to take effect from March 1. This measure aims to prompt timely compliance with tax regulations and registration requirements. The penalty is in alignment with those imposed for late registration in excise tax and value-added tax, demonstrating the government’s commitment to enforcing tax laws effectively.

The introduction of the new penalty is part of Cabinet Decision No. 10 of 2024, which amends the schedule of violations and administrative penalties outlined in Cabinet Decision No. 75 of 2023. These penalties, which came into effect on August 1, 2023, are aimed at addressing violations related to the application of the Corporate Tax Law. The addition of the Dh10,000 fine for late registration underscores the government’s efforts to ensure compliance with tax legislation and deter delays in the registration process.

The Corporate Tax Law, which came into effect on June 1, 2023, establishes a corporate tax rate of nine percent for companies with profits exceeding Dh375,000. This legislation marks a significant step in the UAE’s tax framework and reflects the country’s commitment to modernizing its fiscal policies. By levying corporate tax on profitable companies, the government aims to enhance revenue generation and support sustainable economic growth.

In December 2023, the Federal Tax Authority (FTA) released a comprehensive guide outlining the criteria for entities subject to corporate tax in the UAE. The guide serves as a resource for individuals and businesses operating within the country, providing clarity on their tax obligations and responsibilities. The FTA encourages all relevant parties to familiarize themselves with the Corporate Tax Law, implementing decisions, and other relevant materials available on its website to ensure compliance with regulatory requirements.

Furthermore, the UAE government has introduced the Small Business Relief (SBR) initiative to alleviate the burden of corporate tax on small enterprises. This relief measure is available to resident taxable persons – both natural and juridical – with gross business income of up to Dh3 million in the relevant tax period and any previous tax periods ending on or before December 31, 2026. The SBR aims to support small businesses and promote entrepreneurship by providing them with financial assistance and regulatory relief.

Overall, the implementation of the new fine for late registration in corporate tax underscores the UAE government’s commitment to enhancing tax compliance and fostering a transparent and efficient business environment. By imposing penalties for non-compliance, the government seeks to uphold the integrity of the tax system and ensure fair and equitable treatment for all taxpayers. As businesses navigate the evolving tax landscape, adherence to regulatory requirements remains paramount to avoid penalties and maintain regulatory compliance.