FTA Offers Penalty Waiver and Refunds for Late Registrants

For companies that missed the first corporate tax registration deadline, the UAE has implemented a major relief measure. To make the shift to the new corporate tax system easier, the FTA established a penalty waiver and refund program. The UAE imposed a 9% corporate tax on companies making more than AED 375,000 a year in 2024. This was brought to action to expand the UAE’s revenue streams beyond oil and bring the country into agreement with international tax requirements. However, many businesses, particularly small and medium-sized organizations (SMEs), found it difficult to process and follow the new criteria when this tax was introduced.

Who is eligible for the refund?

Businesses that submit the corporate tax return or annual declaration within seven months from the end of the first tax period, and companies whose financial records are proper and in alignment with International Financial Reporting Standards (IFRS), are eligible for the refund. Keeping your records clean and submitting on time shows responsibility and strengthens your business’s financial reputation.

Refunds for Already Paid Penalties

Companies that meet the waiver criteria and have already paid the AED 10,000 penalty don’t have to worry, it’s not lost. The FTA will credit the refunded amount directly to the taxpayer’s account. This credit can then be used to offset future tax payments, making the financial loads easier and offering businesses a chance to correct their past mistakes, and helping them move forward.

Steps to Follow to Benefit from the Waiver

Identifying the start and end date of your first tax period based on your financial year is crucial. Register on the FTA’s EmaraTaxPortal if not already registered. Ensure your financial records are accurate and comply with IFRS. Make sure your financial records are accurate and comply with the International Financial Reporting Standards. FTA has offered a seven-month period to pay the tax, so submit the corporate tax return or annual declaration within that period. Those who have already paid the penalty can now apply for a refund through FTA’s EmaraTax Platform.

Implications for Businesses

The Federal Tax Authority’s new initiative is a relief for many businesses in the UAE. It gives them a golden chance to fix any missed tax registrations without worrying about financial penalties. This move shows that the UAE understands the challenges businesses face, especially with the shift to the new corporate tax system. It’s a supportive step, and more importantly, it helps build trust between businesses and the government during this important transition period.

Tips to Follow for the Future

Filing the tax under the deadline can save you from paying the penalty of AED 10,000. Ensure timely filing to avoid penalties. As the FTA has brought financial relief for businesses to erase their financial burdens, companies that have already paid the penalty and meet the standards of IFRS can now apply for a refund. This step helps build a culture of compliance among businesses and the FTA. The initiative promotes a genuine commitment to the UAE’s new tax laws, encouraging businesses to stay on the right side of regulations. By offering a chance to correct past mistakes without penalties, it helps create a more understanding and cooperative environment.

Actions to Take

If your business has missed a tax registration deadline, now is the time to act. First, take a moment to assess whether you qualify for the FTA’s waiver and refund opportunity, which could save you from unnecessary penalties. Don’t wait too long, as there are clear deadlines in place, and missing them could mean losing this chance. It’s also a smart move to speak with a tax professional who understands the process. Their guidance can help you navigate the registration and filing steps smoothly, ensuring everything is done correctly and on time. This is a valuable opportunity worth taking seriously.

Maximise this Opportunity

The FTA’s penalty waiver and refund initiative comes as a major relief for businesses adjusting to the UAE’s new corporate tax landscape. Many companies, especially small and medium-sized ones, have faced uncertainty and pressure while trying to understand and comply with the new regulations. 

This initiative shows that the government is not just enforcing rules but also listening to the needs of the business community. By allowing businesses to correct past mistakes without harsh penalties, the UAE is encouraging honesty, learning, and growth. Overall, this move reflects a cooperative approach to tax reform, where businesses feel supported, not punished. It’s a clear message that the UAE values both compliance and the long-term health of its economy.