The United Arab Emirates (UAE’s) well-established reputation as a tax-advantageous jurisdiction is evolving with the recent introduction of corporate tax. While comprehension of the tax regime is essential, ensuring compliance to avoid potential penalties holds equal importance. This shift in the UAE’s fiscal strategy underscores the need for businesses to stay informed about corporate tax regulations.

Let’s delve into the potential consequences of missing deadlines or making errors in your UAE corporate tax filings.

Understanding UAE Corporate Tax Penalties

The table of violations outlined in Cabinet Decision No. (75) of 2023 details the repercussions of various offenses. Here’s a breakdown of some key points:

• Record Keeping: Failing to maintain up-to-date records for tax purposes can result in a hefty fine of AED 10,000 for the first offense. Repeated offenses within 24 months will double the penalty to AED 20,000.
• Information in Arabic: Not providing tax information in Arabic language records can incur a penalty of AED 5,000.
• Late Deregistration: Businesses that delay deregistration application submission beyond the deadline will face a penalty of AED 1,000, accumulating to a maximum of AED 10,000 per month.
• Delayed Notifications: Businesses failing to notify the authorities about changes requiring tax record updates can be penalized with AED 1,000. Repeat offenders within 24 months will see the penalty increase to AED 5,000.
• Legal Representative’s Obligations: Legal representatives who miss sending out appointment notifications or fail to file tax returns face penalties ranging from AED 500 to AED 1,000 per month, depending on the duration of the delay.
• Voluntary Disclosure: Errors in tax returns, assessments, or refunds can be rectified through voluntary disclosure. However, a 1% monthly penalty on the tax difference is applied from the due date until the disclosure is submitted.
• Failure to Disclose Voluntarily: If tax authorities discover discrepancies before a voluntary disclosure is made, a fixed 15% penalty on the tax difference is imposed. An additional 1% monthly penalty is added from the due date until the disclosure or tax assessment is issued.
• Auditor Obstruction: Businesses that hinder tax audits by not providing necessary support can be penalized with AED 20,000.
• Late Declaration: Delaying the submission of declarations attracts a penalty of AED 500 per month for the first year, rising to AED 1,000 per month thereafter.

Staying Compliant and Keep Away UAE Corporate Tax Penalties

Here are some key steps to ensure smooth sailing when it comes to UAE corporate tax filings:

• Timely Registration: Register for corporate tax within the timeframe mandated by the Federal Tax Authority (FTA) to avoid registration penalties.
• Meet Deadlines: File your corporate tax requirements by the official due date to steer clear of late filing penalties.
• Record Keeping: Maintain proper and up-to-date records of your income, expenses, and other tax-related data. This meticulousness ensures the accuracy of your tax return and minimizes the risk of penalties for errors.

By understanding and adhering to corporate tax filing requirements in the UAE, businesses can save themselves from unnecessary expenses and ensure they are compliant with the UAE’s tax regulations. Remember, a proactive approach – registering on time, meeting deadlines, and maintaining accurate records – is key to avoiding penalties and ensuring a smooth tax filing experience.

MS as Your Partner to Dodge UAE Corporate Tax Penalties

Don’t let the complexities of UAE corporate tax filing lead to penalties for your business. MS can help you understand this new corporate tax landscape. Our team of tax professionals can guide you through the registration process, ensure timely filings to avoid penalties, and help you maintain meticulous records for accurate tax return preparation. We understand the complexities of the UAE tax regulations and can minimize the risk of errors or omissions that could trigger penalties. Let MS be your partner in ensuring corporate tax compliance and saving you from unnecessary expenses.