Corporate Tax Fine Waiver Announced
In a significant move to ease the financial burden on businesses and encourage stronger tax compliance, the UAE government has announced a waiver on administrative penalties for companies that missed the deadline to submit their corporate tax registration applications.
This welcome development was confirmed by both the UAE Ministry of Finance and the Federal Tax Authority (FTA), following a Cabinet decision aimed at supporting businesses during the first year of corporate tax implementation.
What’s Changing?
Under the UAE’s Corporate Tax Law, businesses must file their tax return or annual financial statements within seven months from the end of their first tax period. The new decision provides relief to companies that may have missed their registration deadlines but still meet the filing requirement within this timeframe.
Importantly, the FTA has also stated that administrative fines previously collected will be refunded to those who now meet the criteria under the new waiver rules. Further details and procedures for appeals and refunds are expected to follow.
Why This Matters
Corporate tax is still relatively new territory for many UAE-based businesses. Introduced at a standard rate of 9% for financial years starting on or after 1 June 2023, the tax applies to companies with profits exceeding AED 375,000 (approx. £76,200). Businesses earning below this threshold continue to benefit from a 0% tax rate.
Additionally, corporate tax is only applicable if a business’s annual turnover exceeds AED 1 million, offering clarity and protection to small and micro-enterprises.
From 1 January 2025, large multinational companies operating in the UAE will also be subject to a 15% minimum tax rate, in line with global tax reform standards.
What’s Next?
While the waiver is excellent news, businesses should still exercise caution and ensure they understand the full scope of their tax obligations. Details regarding what constitutes a valid appeal, what documentation is required, and how refunds will be processed are expected to be clarified soon.
At Luxe Incorporations, we stay ahead of regulatory changes to support your business every step of the way. Whether it’s corporate tax registration, filing, or advisory, our experts are here to guide you with clarity and confidence. Get in touch today!
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