UAE corporate tax penalties are specific and substantial. For late registration, the penalty is AED 10,000. Missing a tax return deadline results in a penalty of AED 500 per month or part month, starting from the due date. Late payment incurs a penalty at the rate of 14% per year, calculated daily. The Federal Tax Authority also applies penalties for submitting incorrect tax returns. Below is a table outlining the penalties, how much each costs and what triggers them.
Corporate tax penalties at a glance
Penalty type | Amount | Trigger |
|---|---|---|
Late registration | AED 10,000 (one-time) | Failure to register for corporate tax within the FTA-assigned deadline |
Late filing | AED 500 per month or part month | Failure to submit the corporate tax return by the deadline |
Late payment | 14% per year (pro rata, daily) | Failure to pay the tax liability by the payment due date |
Incorrect return | Assessed by FTA (varies) | Filing a return with incorrect information (fines and adjustments may apply) |
When these penalties apply
Late registration
If a taxable business fails to register for corporate tax by its assigned deadline from the Federal Tax Authority, a one-time penalty of AED 10,000 is imposed. This applies even if the business has no tax payable.
Late filing of corporate tax returns
Any return submitted after the filing deadline attracts a penalty. The charge is AED 500 for each month, or part of a month, past the due date until the return is filed. For example, filing 10 days late triggers a full AED 500 charge; filing five weeks late amounts to AED 1,000.
Late payment of corporate tax
If the assessed tax is unpaid by the due date, a penalty of 14% per year is charged, accruing on a daily basis for each day the payment is overdue.
Incorrect corporate tax returns
If a business submits a return with incorrect information, the FTA may impose penalties in an amount it determines and can require corrections or adjustments. The specific penalty varies depending on the circumstances and the nature of the error.
Practical implications for businesses
Penalties for late registration and late filing are fixed and easy to calculate. The late payment penalty, however, accumulates for every day that payment is not made and is based on the outstanding amount. Errors in returns are inspected and dealt with by the FTA case by case. There is no fixed penalty published for incorrect tax returns; enforcement depends on the severity and type of error.
The FTA allows for the possibility of administrative penalty waivers in certain circumstances, but businesses must submit a formal request and support their case.
Reference table: corporate tax penalties
Trigger | Penalty |
|---|---|
Missing FTA-assigned registration deadline | AED 10,000 (one time) |
Corporate tax return filed after due date | AED 500 per month or part month |
Tax payment made after payment due date | 14% per year (daily calculation) |
Incorrect information filed in tax return | Discretionary, case by case |
Clear communication with accounting and timely follow-through on every corporate tax process step are essential to avoid accumulating these penalties.
