UAE to impose Rs 2.25L fine for late corporate tax registration

The United Arab Emirates (UAE) has announced an administrative penalty of Dirham 10,000 (Rs 2,25,735) for late registrations for corporate tax.

The finance ministry announced cabinet decision No 10 of 2024, which amends the schedule of violations and administrative penalties of Cabinet Decision No. 75 of 2023, effective from August 1, 2023. The new penalty will come into effect on March 1, 2024.

The penalty will be imposed on businesses that do not submit their corporate tax registration applications within the timelines specified by the Federal Tax Authority (FTA).

It aims to encourage taxpayer compliance with tax laws through timely corporate tax registration, matching the amount for late excise and value-added tax registration.

The UAE introduced a federal corporate tax at a standard statutory rate of 9 percent starting from June 1, 2023. The business owners in the country will be subject to corporate tax only if their turnover in a calendar year exceeds Dirham one million.

Who are exempt from registering for corporate tax?

Those exempt include government entities, government-controlled entities, extractive companies, and non-extractive natural resource companies that meet the requirements under the corporate tax law.

In addition, non-residents who earn income from UAE sources only and do not have a permanent establishment in the UAE are exempt from registering for corporate tax.