UAE Waives Late Corporate Tax Registration Fines – Register by May 31st!
The UAE's Federal Tax Authority (FTA) has announced a waiver of late registration penalties for corporate tax, provided eligible businesses register by the end of May 2024. This move offers a crucial grace period for companies to ensure compliance without facing significant fines.
Key Details
The Federal Tax Authority (FTA) has confirmed that companies required to register for Corporate Tax but who have not yet done so will have their late registration penalties waived. This waiver is contingent on businesses completing their Corporate Tax registration by May 31, 2024. The standard penalty for failing to register on time is AED 10,000 for the first instance, increasing to AED 20,000 for subsequent failures. This waiver applies specifically to the penalty for late registration, not for late filing or payment of taxes.
Who is Affected
This specific waiver primarily impacts businesses with financial years ending in February or March 2024. According to the FTA's decision, companies whose financial year starts on June 1, 2023, or later, and ends on February 29, 2024, or March 31, 2024, must register by May 31, 2024, to avoid the late registration penalty. While this directly addresses an early group of taxpayers, the broader implication is a push for all eligible businesses to register proactively to avoid penalties, regardless of their specific financial year end.
Implications for Businesses
For startups and established businesses in the UAE, particularly those who may have overlooked or delayed their Corporate Tax registration, this announcement provides a significant opportunity. By registering before the May 31st deadline, eligible businesses can avoid the AED 10,000 or AED 20,000 penalty, freeing up valuable capital. This decision signals the FTA's focus on encouraging compliance and facilitating a smoother transition into the new Corporate Tax regime for the business community.
Looking Ahead
While the late registration penalty is waived for a specific group meeting the May 31st deadline, it's crucial for all businesses to understand their Corporate Tax obligations and deadlines. Future late registrations for other financial year periods will likely still incur penalties according to the law. Furthermore, this waiver does not impact the deadline for filing Corporate Tax returns, which is typically nine months after the end of the financial year. Businesses should consult with tax professionals to ensure full compliance with all aspects of the UAE Corporate Tax law.
Source: AGBI