I. Policy Background and Legal Basis #
Effective from 1 June 2023, the United Arab Emirates officially implemented Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (“Corporate Tax Law”), requiring all taxable persons to register for Corporate Tax within the deadlines prescribed by the Federal Tax Authority (FTA). Failure to register within the prescribed time frame results in an administrative penalty of AED 10,000, pursuant to Cabinet Decision No. 75 of 2023.
To ease the initial compliance burden on taxpayers, the FTA issued Public Clarification CTP006, which took effect on 14 April 2025 and applies retroactively to late registration penalties incurred on or after 1 June 2023. Under this clarification, where certain conditions are met, taxpayers may benefit from a waiver of unpaid penalties, and refunds of previously paid penalties may also be granted.
II. Scope of Eligibility for the Waiver #
The waiver is available to a broad range of persons, including but not limited to:
- Taxable persons who failed to register for Corporate Tax within the prescribed time;
- Persons initially registered as taxable, but later approved as exempt persons by the FTA;
- Qualifying investment funds and public benefit entities eligible for exemption;
- Members of a Tax Group in respect of their first tax period under the group;
- Persons who have already paid the late registration penalty, provided they satisfy the waiver criteria.
III. Conditions for Waiver Eligibility #
A person is eligible for the waiver if either of the following conditions is met:
- The Corporate Tax return is submitted within seven (7) months following the end of the first tax period;
- For exempt persons (such as qualifying investment funds or public benefit entities), the Annual Declaration is submitted within seven (7) months from the end of the first financial year.
Note: The “7-month” time frame is a preferential grace period granted by the FTA, shorter than the standard 9-month deadline under Article 53 of the Corporate Tax Law.
IV. Refund of Previously Paid Penalties #
If the penalty has not yet been paid: The FTA will cancel the penalty, and it will no longer appear as payable in the taxpayer’s EmaraTax account.
If the penalty has already been paid: The FTA will credit AED 10,000 to the taxpayer’s EmaraTax account, which may be used to offset future Corporate Tax liabilities or may be refunded upon request.
V. Practical Process for Waiver Implementation #
No separate waiver application is required. The EmaraTax system will determine eligibility based on whether the taxpayer has filed within the 7-month window.
If the taxpayer has submitted a Reconsideration Request regarding the late registration penalty, such request shall be considered null and void, and the waiver will be applied.
If a Reconsideration Request has already been approved, the taxpayer shall not be eligible for an additional waiver under this initiative.
VI. Illustrative Scenarios #
Scenario A: Company A’s first tax period ended on 31 December 2024. It submitted its Corporate Tax return on 8 July 2025, within 7 months. The late registration penalty was waived.
Scenario B: Company B had already paid the AED 10,000 penalty, but submitted the tax return within the eligible timeframe. The FTA refunded the penalty to its EmaraTax account.
Scenario C: A company registered late but submitted its tax return within 9 months, not within 7 months. It may benefit from a waiver of the late filing penalty, but not the late registration penalty under this initiative.
This article is for informational purposes only and does not constitute legal advice. For case-specific consultation, please contact us. Read our full Legal Disclaimer, which also includes information on translation accuracy.
