Public Clarification on Penalty Waiver released

17 July 2025 – The Federal Tax Authority (FTA) has officially released a Corporate Tax Public Clarification (CTP006) which outlines the Waiver of Administrative Penalty for failure to submit a Corporate Tax registration application within a specified deadline.  The clarification exemplifies the circumstances whereby the Taxable Persons and certain categories of Exempt Persons can have this administrative penalty waived and, if applicable, refunded or credited.

Under Cabinet Decision No. 75 of 2023, a penalty of AED 10,000 is imposed for failing to submit a Corporate Tax registration application within the deadline set by the FTA. However, the Cabinet has approved that the FTA can waive, or refund (if already paid), this penalty for taxable persons and certain exempt persons. This is effective from 14 April 2025, but applicable to penalties incurred from 1 June 2023, provided that specific conditions are met.

Eligible persons include those required to register for Corporate Tax and those applying for exemptions under Article 4(1)(e) to (i) of the United Arab Emirates Corporate Tax Law (UAE CT Law). Categories of eligible exempt persons encompass Qualifying Public Benefit Entities and Qualifying Investment Funds, as well as public pension or social security funds or private pension.

Additionally, juridical persons incorporated in the UAE that are wholly owned and controlled by Government Entities, Government Controlled Entities, public and private pension or social security funds, and Qualifying Investment Funds are included. To be eligible for the waiver,  it is imperative that the tax return or annual declaration (in the case of an exempt person) be submitted within seven months from the end of the first Tax Period (instead of the standard nine months).

If the penalty was already paid, a refund will be credited to the person’s EmaraTax account. This initiative applies only to the first Tax Period, whether past or future. It does not affect the nine-month deadline for settling the Corporate Tax Payable.

The persons who may benefit from this initiative include:

• A person (natural person, juridical person, or other) who is required to file a tax return.
• A person who registers as a taxable person but subsequently forms or joins a tax group.
• A qualifying public benefit entity listed in Cabinet Decision No. 37 of 2023.
• An exempt person under Article 4(1)(f), (g), (h), or (i) of the UAE CT Law includes entities such as Qualifying Investment Funds, as well as public pension or social security funds or private pension. Additionally, juridical persons incorporated in the UAE that are wholly owned and controlled by Government Entities, Government Controlled Entities, public and private pension or social security funds, and Qualifying Investment Funds can also benefit from this concession. This also covers cases where a person initially registers as a taxable person but subsequently has its application to be exempt approved.

Where a person within the scope of this initiative meets the conditions to benefit from the waiver by filing the Tax Return or annual declaration within seven months, the FTA will: 

• Waive the Late Registration Penalty if unpaid, removing it from the EmaraTax account.
• Credit the AED 10,000 amount to the EmaraTax account if already paid.
• Consider pending reconsideration requests for the penalty as null and void under this initiative.
• Take no further action if the reconsideration request for the penalty was already approved.

Where the amount of the Late Registration Penalty is credited, the person can leave the amount towards settling Corporate Tax Payable or request a refund via EmaraTax.

For a Tax Group filing within seven months, the Late Registration Penalty for any member's first Tax Period is waived/credited as applicable.

Key Takeaways

With the above update, the affected taxable/exempt persons in the UAE should evaluate the following:

• Review Eligibility: Determine if they qualify as a Taxable Person or an exempt person under the specific categories, such as public benefit entities or government-controlled entities.
• File Timely: Ensure that Tax Return or Annual Declaration is filed timely, i.e., within 7 months from the end of their first Tax Period to benefit from the penalty waiver.
• Monitor Deadlines: Keep track of filing deadlines, as this shorter 7-month deadline differs from the standard 9-month deadline for Corporate Tax payment.
• Assess Tax Group Filing: If part of a Tax Group, coordinate to ensure the collective filing is done within the 7-month limit to waive penalties for all members.
• Review Past Penalties: Check any penalties incurred from June 2023 onward, and prepare to apply for credits or refunds if they have been paid and the waiver conditions are met. 

Following the above steps will help the affected persons manage Corporate Tax responsibilities efficiently and benefit from the updated penalty waiver process.

Notice

The above is only a brief summary of the current update, is valid at the time of circulation and is based only on information currently available in the public domain which is subject to change. This alert has been written in general terms and does not constitute any form of advice or recommendation by Deloitte and therefore cannot be relied on to cover specific situations; application of the principles set out will depend upon the particular circumstances involved and we highly recommend that you obtain professional advice before acting or refraining from acting on any of the contents of this publication. Deloitte accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of any material in this publication.

Deloitte and Touche Middle East would be pleased to advise readers on how to apply the principles set out in this publication to their specific circumstances.

Contacts

We have a dedicated Business Tax team based in the UAE who have in-depth experience and can support you throughout your readiness journey. Please get in touch with one of our tax experts listed on the following page.

You can also contact us and submit all your queries on this email cituae@deloitte.com.