UAE Corporate Tax Penalties

UAE juridical and natural persons often ask what are the common corporate tax penalties in the UAE? Corporate tax penalties are levied in the event a juridical or natural person fails to comply with the applicable corporate tax laws and regulations. For example, timely corporate tax registration, tax filings, record-keeping requirements, timely payment of taxes, corporate tax deregistration, etc.

As per the Cabinet Decision No. 75 of 2023, these fines can be imposed on businesses, their legal representatives, as well as tax agents. Learn about these violations and related penalties in the table below.

KEY POINTS

• FTA has issued a schedule of administrative penalties for non-compliance with corporate tax laws and regulations which is effective from 1^st August 2023.
• The penalties relate to common tax violations ranging from late corporate tax registration, delay in corporate tax deregistration, tax filing, timely payment of corporate tax liability, corporate tax record keeping requirements, tax evasion, and incorrect submissions.
• The administrative penalties include fixed penalties like AED 5k to AED 10k related to late registration or not keeping proper tax records, continuous penalties until a violation is remedied, monthly penalties for late corporate tax filing or unpaid taxes, and several others.

No.	Violation Description	Administrative Penalty (Amount in AED)
1	If you are running a business in UAE, you must keep certain financial records and information as required by the Tax Procedures Law as well as the Corporate Tax Law. If you do not have it, you are not complying with your tax obligations.	A fine of AED 10,000 (for every non-compliance) will be levied for first violation. If the same violation is repeated within 24 months, the fine increases to AED 20,000.
2	If you run a business or have a tax obligation within UAE, you must submit your tax records in Arabic to the FTA when they request them. If you fail to provide in Arabic language, then a penalty will be imposed.	A fine of AED 5,000 will be imposed on this violation.
3	If you are registered for corporate tax and close your business, you must apply for corporate tax deregistration within the required timeframe. If you don’t, then a penalty will be imposed.	The penalty is AED 1,000 per month, but it will not exceed AED 10,000 in total.
4	Failure to inform the Federal Tax Authority (FTA) about changes made in business or tax details that require amendment in the taxable person details.	You will need to pay AED 1,000 for the first violation. AED 5,000 for a repeated violation within 24 months from the date of the last non-compliance.
5	If a Legal Representative fails to inform the authorities of their appointment on time, in this case the resulting penalties will be paid by the representative’s own funds.	AED 1,000
6	If a Legal Representative misses the deadline to file a tax return, the resulting penalties will be paid by the representative’s own funds.	A penalty of AED 500 is charged for each month of delay in first 12 months. After that, from 13th month, the fine goes up to AED 1,000 per month. The penalty takes effect the day after the filing deadline and will be imposed monthly on that same calendar date.
7	The tax registrant fails to submit its tax return on time, as required under the UAE Corporate Tax regime.	A penalty of AED 500 is charged for each month of delay in first 12 months. After that, from 13th month, the fine goes up to AED 1,000 per month. The penalty takes effect the day after the filing deadline and will be imposed monthly on that same calendar date.
8	The taxable person must settle the due tax on time. Failure to do so is considered a violation of the corporate tax regulations.	1. If the tax is not paid on time, a monthly penalty based on a 14% yearly rate will apply to the unpaid amount, starting the day after the due date and continuing every month. 2. With respect to this administrative penalty, the payment due date in the event of the Tax Assessment and Voluntary Disclosure, shall be as follows: a. Voluntary Disclosure: The payment must be completed within 20 business days following its submission. b. Tax Assessment: The payment deadline is 20 business days from the date of receipt.
9	The registrant files a tax return that contains incorrect information, or in other words it is an inaccurate tax return.	A fine of AED 500 will be levied for this violation, but it can be avoided if the tax return is corrected before the filing deadline.
10	A Voluntary Disclosure made by a taxable person to correct errors which were made in a previously filed tax return, tax assessment, or tax refund application.	A monthly penalty of 1% is charged on the tax difference from the day following the due date of the tax return, tax assessment notification, or tax refund application submission, and  until the voluntary disclosure is made.
11	Not submitting a voluntary disclosure to correct errors in a tax return, tax assessment, or tax refund application before being notified of a tax audit.	1. A fixed penalty of 15% is charged on the amount of the tax difference. 2. An extra 1% penalty per month applies to the tax difference in accordance with the following method: a. If a Taxable Person submits a Voluntary Disclosure after being notified of a Tax Audit, the penalty period will run from the day after the original due date until the date the Voluntary Disclosure is submitted. b. When no voluntary disclosure is submitted, a monthly penalty applies from the day after the original due date until the tax assessment is issued.
12	If a tax audit is taking place, and the tax registrant, or their tax agent or legal representative do not properly facilitate the FTA tax auditor, the penalties will be imposed to whoever is responsible for this non-cooperation.	The fine will be AED 20,000.
13	If a person does not submit the required declaration to Authority, or submits it late, as required under the Corporate Tax Law.	A fine of AED 500 will be imposed for each month of delay during the first 12 months. The fine will increase from 13th month to AED 1,000 per month. This monthly penalty is imposed starting the day after the deadline and recurs on the same date each month.