Learn how the UAE’s 2025 corporate tax penalty waiver helps late registrants avoid fines, claim refunds, and ensure compliance. Discover eligibility, benefits, and how BMS Auditing can assist with corporate tax registration and filing.
The UAE's introduction of corporate tax in 2024 marked a milestone in the country's economic setup. With it, companies across the country—mainland, free zones, and some exemptions—had to register and adjust to an entirely new tax system. Seeing the challenges that this change brought about, the government of the UAE announced a huge relief package in April 2025: a nationwide corporate tax penalty waiver on late registration.
This move is intended to assist businesses, particularly SMEs and startups, through this transformation while further entrenching the UAE as a leading, pro-business jurisdiction.
What Is the UAE Corporate Tax Penalty Waiver?
On April 29, 2025, the UAE Cabinet, the Ministry of Finance, and the Federal Tax Authority (FTA) introduced a one-time waiver for the late registration penalty for corporate tax. Under this scheme, enterprises that failed to register on time will be exempt from incurring the default AED 10,000 fine as long as they file their first annual report or corporate tax return within seven months of the conclusion of their first fiscal year.
For example, if the financial year of a company closes on December 31, 2024, it needs to file its return by July 31, 2025, to avoid a penalty.
Why Was the Penalty Waiver Introduced?
The introduction of corporate tax in the UAE for 2025 presented serious compliance issues, especially for companies that were not familiar with tax processes and infrastructure. The normal penalty for late registration was AED 10,000 for a single offense, and even more for continuous non-compliance.
To facilitate this transition, the government announced the penalty waiver with the aim to:
- Promote voluntary and timely compliance with the new regime.
- Minimize administrative and fiscal burden on SMEs and start-ups.
- Promote tax transparency under international best practices.
- Enhance the UAE's economic diversification and international competitiveness.
Who Can Benefit from the Corporate Tax Penalty Waiver?
The waiver covers a wide range of businesses across the UAE:
- All Types of Businesses: Mainland companies, free zone companies, LLCs, as well as some exempt entities.
- Late Filers: Companies that failed to meet the original registration deadline may still qualify if they file their first corporate tax return within seven months of the end of their fiscal year.
- Exempt Organisations: Although exempt from tax, these organisations need to register and provide documents to take advantage of the waiver.
- Refund: If a company has already paid a penalty but qualifies for the new deadline, the FTA will refund the fine.
Corporate Tax Registration UAE: A Step-by-Step Guide
For compliance and in order to derive full benefit from the waiver, the following is recommended to be followed by business firms:
- Assess Your Tax Liability: Company tax is at 0% on taxable profits below AED 375,000 and 9% on other amounts.
- Obtain Required Documents: Trade license, MOA/AOA, audited financial statements, details of ownership, and bank documents.
- Register on EmaraTax: Our tax experts fill the details and submit your application and documents in the EmaraTax portal.
- File Your Return Accurately: Our team then assesses all reportable taxable income, deductions, and exemptions according to the law and makes correct and timely corporate tax filings.
- Consult a Tax Professional: As a leader in tax consultancy, BMS Auditing ensures flawless compliance, with a keen eye on each company’s unique requirements as per FTA regulations.
What is the Consequence of Non-compliance?
- Without the protection of the waiver, late registration penalties can be severe:
- AED 1,000 first month, + AED 2,000 every subsequent month, up to AED 50,000.
- Incomplete or faulty submissions could result in extra fines and headaches.
How to Make the Most of the Penalty Waiver
To fully leverage this opportunity, businesses should:
- Register and file their first tax return within the 7-month grace period after their tax year ends.
- Ensure all documents are complete, accurate, and compliant with the FTA’s requirements.
- Apply for a refund if a penalty has already been paid and the business qualifies under the new waiver policy.
- Seek expert support from BMS Auditing to navigate the technicalities and avoid costly mistakes.
What This Means for Businesses in the UAE
The UAE corporate tax environment in 2025 represents a more formalized and developed regulatory environment. The late registration penalty waiver is an indication of the government's zeal for balancing fiscal prudence with business facilitation.
Far from being merely a concession, the waiver is a strategic lever to encourage early take-up, instill investor confidence, and facilitate long-term compliance throughout the business landscape.
How BMS Auditing Can Help
BMS Auditing supports all UAE companies with comprehensive, end-to-end corporate tax registration, filing, and tax planning.
Our tax team guarantees:
- Seamless registration through EmaraTax
- On-time and accurate return filing
- Advisory on deductible exemptions and allowances
- Refund of paid penalties
- Complete adherence to UAE tax regulations
Be it a new business, free zone entity, or exempt organization, our structured, thorough approach keeps you in compliance, penalties-free, and maximizing relief schemes such as the 2025 penalty waiver.
Act Now to Avoid Penalties
The UAE's waiver of penalties for late corporate tax registration is only available for a short while. By registering and filing early, companies can save hefty fines, recover refunds, and transition to the new tax regime confidently.
With BMS Auditing, you can smoothly navigate this change and prepare your business for success in the UAE's changing financial landscape.
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