On Tuesday, the Ministry of Finance unveiled a fresh measure, imposing a Dh10,000 fine for individuals or entities registering late for corporate tax. This penalty aims to incentivize taxpayers to adhere to tax regulations and ensure prompt registration.
The penalty amount mirrors those associated with late registration for both excise tax and value-added tax.
The recent announcement of Cabinet Decision No. 10 of 2024 brings amendments to the violation schedule and administrative penalties outlined in Cabinet Decision No. 75 of 2023. The latter delineated penalties imposed by the Federal Tax Authority (FTA) for infringements related to the Corporate Tax Law, effective from August 1, 2023. The newly introduced fine is set to take effect on March 1, 2024.
Initiated on June 1, 2023, the Corporate Tax Law in the UAE establishes one of the world’s lowest corporate tax rates. With a nine percent tax rate applicable to companies generating profits of Dh375,000 and above, the law aims to foster a favorable business environment.
In December 2023, the FTA released a comprehensive guide determining the entities subject to corporate tax in the country. Urging individuals with income in the UAE or engaged in business activities within the nation to consult the guide, the FTA emphasized the importance of acquainting oneself with the Corporate Tax Law, implementation decisions, and relevant materials available on their official website.
Furthermore, the UAE government has introduced the Small Business Relief (SBR) program, aiming to facilitate the application of corporate tax for small businesses. Resident taxable entities, whether natural or juridical, qualify for this relief if their gross business income does not exceed Dh3 million in the relevant tax period and any preceding tax periods concluding on or before December 31, 2026.
