UAE Corporate Tax penalties are designed to encourage on-time compliance. Most are fixed amounts that apply even if you have no tax to pay, so a small company that ignores its obligations can still end up with a five-figure bill.
UAE Corporate Tax penalties at a glance
| Violation | Penalty |
|---|---|
| Late registration | AED 10,000 (can be waived, see below) |
| Late return: months 1 to 12 | AED 500 for each month or part month |
| Late return: month 13 onwards | AED 1,000 for each month or part month |
| Late payment | 14% a year, charged monthly on the unpaid tax |
| Failure to keep required records | AED 10,000 (AED 20,000 for a repeat within 24 months) |
Further penalties apply for incorrect returns, failing to notify the FTA of changes, and issues found in a tax audit. Always check the FTA's current penalty schedule.
Late registration: AED 10,000
New companies must register within three months of incorporation. Miss it and the penalty is AED 10,000, whether or not you have any tax to pay. See Corporate Tax Registration Deadline UAE.
The penalty waiver
The FTA offers a way out: if you file your first Corporate Tax return within seven months of the end of your first tax period, two months earlier than the normal nine-month deadline, the AED 10,000 late registration penalty is waived. If you have already paid it, it is refunded.
- It applies to your first tax period only.
- It covers the late registration penalty only, not late filing or late payment penalties.
Example: a company that registered late and has a first tax period ending 31 December 2026 must file its first return by 31 July 2027 to get the waiver.
Late filing: AED 500, then AED 1,000 a month
Returns are due nine months after your year-end. A return filed even one day late counts as a month late. The penalty is AED 500 for each month in the first year of delay, then AED 1,000 a month. A return filed 14 months late costs 12 × AED 500 + 2 × AED 1,000 = AED 8,000, before any late payment penalty.
Late payment: 14% a year
Corporate Tax that is not paid by the due date attracts a penalty of 14% a year, charged monthly on the amount still unpaid. For AED 50,000 of tax paid three months late, that is about AED 50,000 × 14% ÷ 12 × 3 = AED 1,750.
Estimate your own figures with the penalty calculator.
Record-keeping penalties
You must keep accounting records and supporting documents, generally for seven years after the end of the tax period. Failing to keep them can cost AED 10,000, and AED 20,000 for a repeat within 24 months. Monthly bookkeeping is the cheapest insurance against this.
Can Corporate Tax penalties be waived?
Apart from the late registration waiver above, you can ask the FTA to reconsider a penalty if you believe it was applied incorrectly, or apply for a waiver where there were genuine reasons for the delay. Approval is not guaranteed, so the best strategy is not to need one.
How to avoid Corporate Tax penalties
- Register within three months of incorporation.
- Put your return deadline (nine months after year-end) in your calendar.
- Keep your books monthly so the year-end close is quick.
- Pay the tax with the return.
- If you registered late, aim to file your first return within seven months.
Already behind? Our catch-up bookkeeping service gets your books and filings up to date.
See what you could owe
Our free calculator estimates Corporate Tax and VAT penalties for late registration, late filing and late payment.