The UAE corporate tax system was designed to promote fairness, transparency, and long-term business growth. Along with it came strict compliance rules that every registered company must follow.
The Federal Tax Authority (FTA) imposes penalties for late registration, delayed filing, or inaccurate submissions. These fines can become costly if businesses fail to act quickly.
Read on to learn what the UAE corporate tax penalties are, how they’re applied, and how to avoid them before they affect your business.
What Is the UAE Corporate Tax Penalty
The UAE corporate tax penalty is an administrative fine issued by the Federal Tax Authority (FTA) when a business violates the UAE Corporate Tax Law. Penalties are applied to cases such as:
✅Late registration
✅Late filing or late payment
✅Submitting inaccurate information
✅Not maintaining accounting records
These fines encourage accurate reporting and timely compliance with tax regulations.
Legal Basis for Corporate Tax Penalties in the UAE
Corporate tax penalties are governed by Cabinet Decision No. 75 of 2023, as amended by Cabinet Decision No. 10 of 2024.
These decisions define how penalties are calculated and enforced by the FTA through the EmaraTax system.
Key references include:
✅Federal Decree-Law No. 47 of 2022 – Establishes the UAE Corporate Tax Law.
✅Cabinet Decision No. 75 of 2023 – Lists administrative penalties and fine amounts.
✅FTA Clarifications (2024-2025) – Announce penalty waivers and updates.
Main Types of UAE Corporate Tax Penalties
Late Registration Penalty
Businesses that fail to register within the required timeframe are fined AED 10,000.
This penalty applies even if no corporate tax is due.
Tip: Register early through the FTA EmaraTax portal.
📚Also read: Is Corporate Tax Registration Mandatory in the UAE?
Late Filing of Corporate Tax Returns
If a business misses its filing deadline, the FTA applies the following fines:
✅AED 500 per month for the first 12 months
✅AED 1,000 per month starting from the 13th month
These penalties start accruing the day after the deadline.
Example: If your financial year ends on December 31, 2024, the return is due by September 30, 2025. Filing in October triggers one month’s penalty.
📚Also read: UAE Corporate Tax Filing Deadline 2025: Filing Dates & Rules in UAE
Late Payment
If a business fails to pay its tax due on time, the FTA applies a 14 percent annual interest, calculated monthly on the unpaid amount.
Interest continues to accrue until the outstanding balance is paid.
Incorrect or Incomplete Tax Data
If your business files incorrect or incomplete information, the FTA imposes AED 500, unless you correct it before the filing deadline.
If the error is discovered later and no voluntary disclosure is made, additional penalties apply:
✅15 percent fixed penalty on the tax difference
✅1 percent monthly penalty until corrected
Penalties between AED 10,000 and AED 20,000 apply only to record-keeping or audit-related violations, not basic return errors.
Partnering with OPAB ensures accuracy and helps prevent these costly mistakes.
Failure to Maintain Accounting Records
Businesses must keep financial records for at least seven years.
Penalties for non-compliance include:
✅AED 10,000 for the first offense
✅AED 20,000 for repeated violations within 24 months
Proper record-keeping simplifies audits and builds long-term compliance.
📚 Also read: Tax Compliance UAE
Other Common Violations
The FTA also applies fines for:
✅Not updating FTA registration details: AED 1,000 (AED 5,000 if repeated)
✅Submitting non-Arabic documents upon request: AED 5,000
✅Delayed deregistration: AED 1,000 per month, up to AED 10,000
✅Refusing audit cooperation: AED 20,000
How the FTA Calculates and Enforces Penalties
Penalties are automatically calculated in the EmaraTax system when a deadline or obligation is missed.
Key points:
- Multiple violations lead to cumulative penalties.
- Notifications are issued through the registered FTA portal and email.
- Unpaid fines block future filings, refunds, or license renewals.
- All penalties must be settled before submitting new declarations.
Recent Updates and Penalty Waiver Rules (2025)
The FTA introduced new relief measures to support early compliance.
Late Registration Waiver
The AED 10,000 late registration penalty can be waived if you:
✅Submit your first corporate tax return (or annual declaration) within seven months after your first tax period ends.
✅If you already paid the fine, it can be credited or refunded once approved.
This program motivates new registrants to complete filings promptly.
See the official FTA waiver announcement.
📚Also read: UAE Corporate Tax Law
How to Check and Pay Corporate Tax Penalties
To review or pay penalties:
- Log in to your EmaraTax account.
- Go to My Payments → Outstanding Penalties.
- Review the penalty details and violation type.
- Pay through bank transfer or card.
- If necessary, submit a Relief Request to appeal or explain.
How to Avoid UAE Corporate Tax Penalties
Follow these proven compliance habits to stay penalty-free:
- Register Early: Apply as soon as you’re eligible.
- File and Pay on Time: Track key dates in a compliance calendar.
- Keep Detailed Records: Maintain books and ledgers for seven years.
- Use Accounting Software: Tools like Odoo, Zoho Books, or QuickBooks help automate accuracy.
- Work with Experts: Engage OPAB for professional filing and compliance support.
Real Examples of Corporate Tax Penalties
✅A retailer missed registration and paid AED 10,000.
✅A logistics company filed late and was fined AED 1,000.
✅A construction firm delayed payment and accrued 14 percent interest.
✅A service provider lacked records and was fined AED 10,000.
✅An exporter refused an audit and faced AED 20,000.
These examples highlight why timely compliance matters.
Conclusion
The UAE corporate tax penalty system ensures fair enforcement, but the fines can be steep for those who miss deadlines or file incomplete data. Late registration, missed filings, and poor record management can quickly add up. By following FTA guidelines and staying organized, your business can remain compliant and avoid unnecessary costs.
If you need expert support with accounting software setup or complete compliance management, contact Outsource Prime Accountants and Bookkeepers (OPAB). OPAB helps UAE businesses implement and optimize Odoo, Zoho Books, and QuickBooks, ensuring accuracy and full compliance with FTA requirements.
Reach out to OPAB today for personalized support that keeps your business penalty-free.
FAQs
What is the penalty for not filing a corporate tax return in UAE
The fine is AED 500 per month for the first 12 months of delay and AED 1,000 per month thereafter until the return is filed.
Is it mandatory to file corporate tax in the UAE
Yes. Every taxable business under Federal Decree-Law No. 47 of 2022 must register and file corporate tax returns through the FTA.
What is the new tax rule in UAE
The UAE applies a 9 percent corporate tax on business profits above AED 375,000, with qualifying Free Zone entities eligible for exemptions.
How to know your corporate tax period in UAE
Your corporate tax period generally follows your company’s financial year. You can confirm it in your FTA account.
Who must pay the UAE corporate tax
Any business earning taxable income in the UAE that meets the registration threshold is required to pay corporate tax.
