AED 10,000 Penalty for Late Corporate Tax Registration in the UAE
The UAE’s Federal Tax Authority (FTA) has imposed a mandatory corporate tax registration for all eligible businesses operating in the country. Failure to register on time now carries a penalty of AED 10,000, making timely compliance essential for businesses of all sizes.
In this article, we’ll cover who needs to register, the deadline for corporate tax registration, key compliance requirements, and how businesses can avoid fines while optimizing their tax structure.
Understanding UAE Corporate Tax Registration
Introduced in June 2023, the UAE Corporate Tax Law (Federal Decree-Law No. 47 of 2022) applies to:
- All taxable businesses operating in the UAE.
- Companies earning above AED 375,000 annually (subject to a 9% corporate tax).
- Entities registered in Free Zones that do not qualify for tax exemptions.
- Foreign businesses with a permanent establishment (PE) in the UAE.
Corporate Tax Rates in the UAE
| Business Type | Corporate Tax Rate |
|---|---|
| Income Below AED 375,000 | 0% |
| Income Above AED 375,000 | 9% |
| Free Zone Companies (Eligible) | 0% (if compliant with Free Zone incentives) |
| Large Multinational Corporations (Pillar Two Compliance) | 15% |
🔎 Key Takeaway: Even if your business earns below AED 375,000, you must still register to avoid penalties.
AED 10,000 Penalty for Late Corporate Tax Registration
Who Will Be Penalized?
The Federal Tax Authority (FTA) has made corporate tax registration mandatory for all businesses, regardless of their revenue. This means:
- Even businesses operating at a loss must register.
- Companies in Free Zones must register, even if they qualify for tax incentives.
- Startups, small businesses, and sole establishments must comply.
📌 FTA Deadline: Register before your business’s first tax period starts.
Failure to register on time will result in a AED 10,000 fine.
How Does the UAE Compare to Other Countries in Terms of Corporate Tax Penalties?
| Country | Late Registration Penalty | Additional Consequences |
|---|---|---|
| UAE | AED 10,000 | Tax audits, potential business restrictions |
| UK | £100 (AED 460) - £1,500 | Interest on unpaid tax |
| USA | $250 (AED 920) - $10,000 | Legal action, business restrictions |
| Singapore | SGD 500 (AED 1,370) - SGD 1,000 | Prosecution in extreme cases |
The UAE has one of the strictest penalty systems for late corporate tax registration. Unlike in the UK, where penalties start at a low £100, the UAE immediately enforces a steep AED 10,000 fine.
Common Misconceptions About Corporate Tax Registration
1. "If I Pay VAT, I Don't Need to Register for Corporate Tax" – FALSE
Corporate tax and VAT are separate taxes:
| Feature | Corporate Tax | VAT |
|---|---|---|
| Tax Type | Tax on business profits | Tax on goods & services |
| Applicable To | Businesses earning above AED 375,000 | Businesses exceeding AED 375,000 in taxable sales |
| Filing Frequency | Annually | Quarterly |
| Tax Rate | 9% | 5% |
🔎 Fact: Even if you have a VAT registration, you must separately register for corporate tax.
How to Avoid the AED 10,000 Penalty
1. Register for Corporate Tax ASAP
- Use the FTA’s EmaraTax Portal to complete registration.
- Submit all required documents, including:
- Trade license
- Memorandum of Association (MOA)
- Passport & Emirates ID of shareholders
- Financial statements (if applicable)
2. Ensure Proper Bookkeeping & Accounting
- All businesses must maintain financial records for corporate tax compliance.
- Annual financial statements & tax filing must be submitted.
- Lack of records can result in additional penalties.
📌 Tip: Get professional accounting services to ensure compliance. Affinitas DMCC offers accounting packages starting from AED 999/month.
Accounting Packages
Accounting Package Premium
From: 999,00 د.إ / month
3. Use a Corporate Bank Account
- Personal bank accounts cannot be used for business transactions.
- Ensure all company transactions go through a corporate bank account.
- This makes tax filing and audits easier.
FAQs About UAE Corporate Tax Registration
1. Who Needs to Register for Corporate Tax in the UAE?
All businesses, including small businesses and Free Zone companies, must register even if they earn below AED 375,000.
2. When is the Deadline for Corporate Tax Registration?
Companies should register before the start of their tax period. Failure to do so will result in a AED 10,000 penalty.
3. What Happens If I Don’t Register?
- You will face a fine of AED 10,000.
- The FTA may conduct a tax audit on your company.
- You could face restrictions on business activities.
4. Can I Register for Corporate Tax Myself?
Yes, but it is highly recommended to seek professional assistance. Incorrect filing may result in additional penalties.
5. How Much Does Corporate Tax Filing Cost in the UAE?
Corporate tax registration costs AED 399 (Affinitas DMCC).
Corporate tax filing services start from AED 1,999.
Final Thoughts: Why Businesses Must Act Now
🚨 Failing to register for corporate tax in the UAE is no longer an option.
🚨 Avoid the AED 10,000 fine by registering early.
✅ Key Takeaways:
✔ Corporate Tax Registration is Mandatory – even for small businesses.
✔ AED 10,000 fine for late registration.
✔ Corporate tax is separate from VAT – both require registration.
✔ Bookkeeping & compliance are essential to avoid further penalties.
📌 Need help registering for corporate tax?
👉 Get expert tax assistance from Affinitas DMCC today!
