0501130164
info@reyson.ae
Connect Us
GET A QUOTE
Dubai - 0501130164 info@reyson.ae

UAE Corporate Tax Fines and Penalties

Akshaya Ashok Nouphal P C
Written By Akshaya Ashok, Reviewed By Nouphal P C
Published on 29/02/2024
Corporate Tax Fines and Penalties

Businesses operating in the UAE must comply with corporate tax regulations to avoid fines and penalties. Enterprises must register for corporate tax and make timely payments to stay in line with the law and prevent any potential penalties or fines. Therefore, it is essential to take prompt action and ensure compliance with the tax requirements as soon as possible.

UAE Corporate Tax Penalties

From June 1, 2023, the UAE introduced Corporate Tax, and businesses were ready to handle its impact. Not complying with the Corporate Tax regulations set by the Federal Tax Authorities and the Ministry of Finance could lead to fines and penalties. To address this, the UAE issued Cabinet Decision No. (75) of 2023, which outlines administrative penalties for violations of Federal Decree-Law No. (47) of 2022 concerning the taxation of corporations and businesses.

The Cabinet Decision No. (75) of 2023 is a vital part of the UAE's efforts to enforce penalties for violations of Federal Decree-Law No. (47) of 2022. This decision gains even more importance as the UAE gets closer to implementing corporate tax, aiming to promote tax compliance among businesses and organizations.

Starting from August 1, 2023, the Official Gazette will publish this decision, and it will come into effect. From this date onward, those who break the Corporate Tax Law will be subject to the specified Administrative Penalties mentioned in the table.

Violations and the corresponding administrative penalties related to the application of Federal Decree-Law No. (47) of 2022 on the taxation of businesses and companies.

Sl. No. Violation Penalty Amount in AED
1
  • Not keeping required records under tax laws is a violation.

 One of these shall apply

  • 10,000 for each violation.
  • 20,000 for repeated violations within 24 months.
2
  • Not submitting tax-related data, records, and documents in Arabic to the Authority when requested.

5,000
3
  • Not submitting a deregistration application within the specified timeframe in the Corporate Tax Law and its implementing decisions is a violation.
  • Late submission incurs a 1,000 penalty, increasing by 1,000 monthly, up to a maximum of 10,000.
4
  • Not informing the Authority of any case requiring an amendment to the Tax record.

 One of these shall apply

  • 1,000 for each violation.
  • Repeated violations within 24 months will incur a $5,000 penalty each.
5
  • If the Legal Representative fails to provide timely notification of their appointment, they will be personally liable for the penalties.
 1,000
6
  • Legal Representative's late Tax Return filing incurs penalties from their own funds.
  • 500 per month (or part thereof) for the first twelve months.
  • 1,000 per month (or part thereof) from the 13th month onwards, starting the day after the Tax Return's submission deadline.
7
  • Late Tax Return Submission.
  • 500 per month (or part thereof) for the first twelve months.
  • 1,000 per month (or part thereof) from the thirteenth month onwards, starting from the day after the Tax.
8
  • Unsettled Payable Tax.
  • 14% per annum on unsettled Payable Tax, applied monthly from the day after the due date of payment.
  • Due date of payment for Voluntary Disclosure: 20 Business Days from submission. For Tax Assessment: 20 Business Days from receipt.
9
  • Incorrect Tax Return submission.
  500, unless the Person corrects the Tax Return before the submission deadline as per   Corporate Tax Law.
10
  • Submitting a Voluntary Disclosure for errors in Tax Return, Tax Assessment, or Tax Refund Application under Article (10) of the Tax Procedures Law.
  • 1% per month (or part thereof) on the Tax Difference from the due date of the Tax Return, Tax refund application, or Tax Assessment notification until the Voluntary Disclosure submission date.
11
  • Not submitting a Voluntary Disclosure for errors in Tax Return, Tax Assessment, or Tax Refund application under Article (10) of the Tax Procedures Law before being notified of a Tax Audit is a violation.
  • 15% fixed penalty on the Tax Difference.
  • 1% per month (or part thereof) on the Tax Difference.
12
  • Not facilitating the Tax Auditor during a Tax Audit.
 20,000
13
  • Late submission of a Declaration to the Authority.
  • First 12 months: 500 per month.
  • From the thirteenth month onwards: 1,000 per month.

From August 1, 2023, businesses, tax persons, and Freezone Persons in the UAE will face enforcement of administrative fines and penalties for corporate tax violations.

UAE Corporate Tax Fines For Late Registration

Every business must register for Corporate Tax and obtain a Registration number. During the registration process, it is essential to submit all the required documents correctly. Failure to register or delaying the registration for Corporate Tax can result in significant fines.

UAE Corporate Tax Penalties For Late Return Filing

Late submission of Corporate Tax returns can lead to substantial penalties. For instance, if a business's fiscal year ends in April, and the tax return filing deadline is on March 15th, not complying with federal decree laws or filing taxes after the due date can result in significant fines in Dirhams.

UAE Corporate Tax Late Payment Penalty

In the UAE, late payment penalties for corporate tax are calculated using a common formula. Initially, a fixed penalty, usually a percentage of the outstanding tax amount, is applied for the first month of delay. For each subsequent month of delay, an additional fixed penalty is added. Moreover, interest is imposed on the overdue tax amount, starting from the due date until the full tax amount is paid.

Paying corporate taxes on time is crucial for companies to avoid penalties and fines imposed by the authorities. Timely tax payments demonstrate compliance and responsibility, enhancing the company's reputation and trustworthiness among stakeholders. Additionally, on-time tax payments ensure smooth business operations and avoid potential legal issues, allowing companies to focus on growth and development.

Corporate Tax Services in Dubai

Making timely tax payments in line with the Ministry of Finance regulations is crucial to avoid fines or penalties. At Reyson Badger, we are dedicated to providing corporate tax services in Dubai, UAE. Our expertise helps clients stay compliant with tax laws and remain informed about any corporate tax developments. Get in touch with Reyson Badger, a leading accounting and auditing firm in the UAE, to know more.

Akshaya Ashok
Written By

Akshaya Ashok

Akshaya Ashok is a content writer specializing in creating content focused on accounting and auditing. With over two years of experience, she has developed expertise in crafting professional content for the financial sector.

Recent Blogs

A Comprehensive Overview of the ICV Registration Process
16/12/2023

A Comprehensive Guide on the UAE NAFIS Registration Process
17/12/2023

A Comprehensive Guide on Excise Tax Registration in UAE
18/12/2023

A Comprehensive Guide on Excise Tax Rate in UAE
19/12/2023

7 Tips to Minimize Your Business Expenses in UAE
20/12/2023

Copyright @ Reyson Badger 2025
Book Free Consultation