The UAE Ministry of Finance has announced a new Dh10,000 fine for businesses that fail to register for corporate tax on time. This penalty, effective from March 1, 2024, aims to encourage compliance with tax regulations and ensure timely registration.
Details of the New Fine
The fine aligns with penalties for late registration of excise tax and value-added tax. This measure comes as part of Cabinet Decision No. 10 of 2024, which amends the schedule of violations and administrative penalties outlined in Cabinet Decision No. 75 of 2023. The latter established penalties for violations related to the Corporate Tax Law, which took effect on June 1, 2023.
Corporate Tax Overview
UAE’s corporate tax is among the lowest globally, imposing a 9% tax on companies with profits exceeding Dh375,000. The introduction of this tax marks a significant shift in the UAE’s tax landscape, which has traditionally been tax-friendly.In December 2023, the Federal Tax Authority (FTA) released a guide detailing who is subject to corporate tax, urging individuals and businesses operating in the UAE to familiarize themselves with the new regulations.
Small Business Relief Program
To ease the transition to the corporate tax regime, the UAE government has introduced the Small Business Relief (SBR) program. This initiative supports resident taxable persons—both individuals and entities—with gross business income up to Dh3 million during the relevant tax period, extending to previous periods ending on or before December 31, 2026.
The introduction of the Dh10,000 fine for late corporate tax registration underscores the UAE government’s commitment to ensuring compliance with tax laws. Businesses must be aware of these changes and register promptly to avoid penalties. The corporate tax regime, along with the SBR program, aims to create a fair and efficient tax environment while supporting small businesses in the UAE.