UAE Corporate Tax: How to Avoid Penalties with the FTA’s New Registration Waiver Scheme
In a significant development for businesses across the UAE, the Federal Tax Authority (FTA) has introduced a penalty waiver scheme for late corporate tax registrations. This initiative applies to the first tax period and offers much-needed relief for companies and individuals navigating the new corporate tax regime.
But what exactly does this mean for your business, and will new companies benefit from this in 2026 too? Here’s what you need to know.
Missed the Corporate Tax Registration Deadline?
The FTA rolled out timelines for corporate tax registration in February/March 2024. Since then, missing the registration deadline has carried an administrative penalty of AED 10,000.
However, in May, the FTA launched a welcome initiative to waive these penalties under specific conditions. A public clarification (CTP006) has now been issued to explain the details.
Who Is Eligible for the Penalty Waiver?
The waiver applies not only to companies but also to individuals subject to corporate tax. The main requirement? Submit your tax return within seven months from the end of your first tax period—two months earlier than the standard nine-month deadline.
There has been some confusion in the business community regarding return deadlines. For example, the 31 July deadline only applies to entities with a January–December financial year. Companies following an April–March financial year must submit their return by 30 September to qualify for the waiver.
Even entities exempt from corporate tax—such as Qualifying Public Benefit Entities (QPBE) and Qualifying Investment Funds (QIF)—can benefit from the waiver, provided they submit their annual declaration within seven months of the end of their first financial year.
Do You Also Need to Pay the Tax Early?
A common misconception is that tax must also be paid early when filing the return within seven months. The FTA has clarified that the tax payment deadline remains nine months from the end of the tax period. Only the return needs to be submitted within seven months to benefit from the waiver.
Is an Application Required?
There is no need to apply separately for the waiver. If the tax return is submitted on time—within the seven-month window—the waiver will be applied automatically in EmaraTax.
If the penalty remains unpaid, it will be cancelled.
If the penalty was already paid, the AED 10,000 will be credited to your corporate tax account (not your VAT account).
This amount can either be used against future tax liabilities or refunded.
Are You a New Business Established in 2025?
Businesses incorporated on or after 1 March 2024 must register for corporate tax within three months of incorporation. Many startups have received fines simply due to miscalculating this timeframe.
For instance, a company incorporated on 15 January 2025 must register by 15 April 2025, not at the end of April.
Importantly, the FTA clarification confirms that the penalty waiver applies to the first tax period, whether in the past or future. This suggests that new companies established in 2025 could benefit from the waiver in 2026—provided they meet the required conditions.
What If You Join a Tax Group?
If a business receives a late registration penalty and subsequently becomes part of a tax group, it may still qualify for the waiver. In this case, the tax return for the group must be submitted within seven months of the end of the relevant tax period.
Final Thoughts
The FTA’s waiver initiative is a constructive step towards promoting tax compliance while easing the financial burden on businesses. However, the benefits are only available to those who act quickly and stay informed of their obligations.
At Zyla Accountants, we help businesses across Dubai stay compliant, avoid penalties, and make the most of government initiatives.
Need support with corporate tax registration or filing?
Get in touch with FTA Agents Zyla Accountants today. We’re here to guide you through every step.