Cabinet Announces Dh10,000 Fine for Late Registration for UAE Corporate Tax

 

The UAE government has introduced a new Dh10,000 fine for late registration for corporate tax, effective March 1.

The penalty was introduced to encourage taxpayers to comply with tax regulations and register in a timely fashion. The penalty amount for late tax registration is aligned with the penalty associated with late registration for excise tax and value added tax..
Implemented since June 1, 2023, UAE's corporate tax, set at nine per cent for profits exceeding Dh375,000, stands among the world's lowest.

The Federal Tax Authority (FTA) began enforcing penalties outlined in Cabinet Decision No. 75 of 2023 from August 1, 2023. The latest fine targets late registrants and underscores the government's push for tax law adherence.

To aid small businesses, the UAE offers Small Business Relief (SBR), applicable to resident taxable persons with gross incomes up to Dh3 million until December 31, 2026. Meanwhile, guidelines released in December 2023 clarify corporate tax applicability, urging individuals and businesses operating wholly or partly in the UAE to consult FTA resources for compliance.

The introduction of corporate tax aligns with the UAE's strategy to diversify revenue sources. Despite the tax regime, including a nine per cent general rate (15 per cent for large multinationals) and five per cent VAT, the UAE remains tax-competitive.
Notably, free zones enjoy zero per cent corporate tax on qualifying income, alongside participation exemptions and an extensive network of Double Tax Treaties, enhancing the nation's economic appeal.

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