Administrative Penalties for Corporate Tax in the UAE

What is Corporate Tax in UAE?

Corporate Tax is a type of direct tax imposed on the overall earnings of corporations and other enterprises. In some jurisdictions, it is alternatively known as "Corporate Income Tax" or "Business Profits Tax."

What are the penalties in Corporate tax ?

Penalties for Delayed Submission of Corporate Tax Returns?

Late submission of corporate tax returns can lead to substantial fines. The penalty structure for late payment of tax liability is as follows: 2% of unpaid tax is due on the day following the due date. 4% of unpaid tax is applied monthly, starting one month after the due date.?

For instance, if a business's fiscal year ends in April and the tax return filing deadline is on the 15th day of March, failure to comply with federal decree laws or filing tax returns after the due date can result in significant financial penalties.

Penalty for Delayed Payment of Corporate Tax In the UAE

The late payment penalty for corporate tax is calculated using the following formula:

• A fixed penalty, typically a percentage of the outstanding tax amount, is imposed for the first month of delay.
• Each subsequent month of delay incurs an additional fixed penalty.
• Interest is applied to the overdue tax amount, starting from the due date and continuing until the full tax amount is paid.

The decision is effective from 1 August 2023, Punctual payment of corporate taxes is crucial for companies to avoid these fines and potential penalties. Complying with tax laws and promptly fulfilling tax responsibilities is essential to prevent financial difficulties and maintain a positive relationship with the tax authorities. Penalties will be levied on both individual and corporate taxpayers who fail to fulfill their obligations under the UAE Corporate Tax Law.

Click here to access the list of penalties issued for Corporate Tax

The meanings in Annexed to Cabinet Decision No. (75) of 2023 on Violations Related to the Application of Federal Decree-Law No. (47) of 2022 regarding Taxation of Corporations and Businesses shall be applicable. Otherwise, the provided definitions apply. In this context, "Tax" refers to Corporate Tax, and "Tax Procedures Law" refers to Federal Decree-Law No. (28) of 2022. For Clauses (3), (6), (7), (8), and (13) of the attached table, if a penalty is imposed on the same date monthly and that date is absent, it will be considered the last day of that month. Other months' penalties follow the first monthly penalty date.

For understanding more about the Corporate Tax Law and Registration and assistance, reach out to us on : ? [email protected] | ?? +971 523205619

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