Corporate Tax Penalty and Fines of AED 10,000 in UAE

The Federal Tax Authority (FTA) has confirmed a flat penalty of AED 10,000 for late Corporate Tax registration in the UAE, under Cabinet Decision No. 75 of 2023 on administrative penalties for violations related to Corporate Tax. This guide covers who this penalty applies to, common reasons it’s imposed, how to formally object to it, and the wider consequences of ongoing non-compliance.

Who Does This Penalty Apply To?

The AED 10,000 late registration penalty applies to any taxable person, whether a company, individual conducting business activity above the applicable threshold, or free zone entity, that fails to register for Corporate Tax with the FTA within the deadline set for their specific category of business.

Also check: Corporate Tax Services in UAE

Common Reasons the Penalty Is Imposed

• Missing the registration deadline. Each taxable person category has a specific registration deadline based on their license issuance date or the date they became subject to Corporate Tax, missing that deadline triggers the penalty automatically.
• Assuming exemption without confirming it. Businesses that assume they’re exempt from Corporate Tax, without formally confirming this or applying for recognized exemption where required, can still be liable for the late registration penalty if that assumption turns out to be incorrect.
• Delayed business setup completion. Businesses that complete their trade license or free zone registration late sometimes miss the Corporate Tax registration deadline as a downstream consequence, without realizing the two processes carry separate timelines.

Must check: Corporate Tax Registration

Worked Example: Calculating Exposure From a Missed Deadline

A business incorporated in the UAE was required to register for Corporate Tax by a specific deadline tied to its license issuance date, but registration was completed 3 months after that deadline due to an internal administrative oversight. Regardless of how late the registration ultimately was, whether 1 day or several months, the penalty remains a flat AED 10,000, it doesn’t increase with the length of the delay the way some other UAE tax penalties do. This flat structure means the cost of discovering and correcting a missed registration early is identical to discovering it much later, reinforcing that there’s no genuine benefit to delaying correction once a missed deadline is identified.

How to Formally Object to the Penalty

A taxable person who believes the AED 10,000 penalty was applied incorrectly can submit a formal reconsideration request to the FTA within 20 business days of being notified of the penalty decision. The request needs to set out clear grounds for reconsideration, supported by relevant documentation, rather than a general objection. If the FTA rejects the reconsideration request, or the taxable person disagrees with the outcome, an appeal can be filed with the Tax Disputes Resolution Committee (TDRC) within a further 20 business days. Missing either of these windows generally forfeits the right to challenge the penalty through this specific process.

Broader Consequences of Corporate Tax Non-Compliance

Beyond the AED 10,000 late registration penalty itself, continued non-compliance carries additional exposure:

• Ongoing accrual of further penalties for related violations, such as late filing or late payment once registration is eventually completed
• Increased scrutiny and potential audit attention from the FTA
• Complications with trade license renewal, banking relationships, and investor or partner due diligence, which increasingly rely on confirmed tax compliance status

Frequently Asked Questions (FAQs)

How Farahat & Co. Can Help

Farahat & Co., a trusted Tax Firm in UAE, helps businesses complete Corporate Tax registration on time, manage penalty reconsideration requests, and resolve FTA disputes.

Contact Farahat & Co. today to discuss your Corporate Tax registration and penalty requirements.