Introduction

With the full enforcement of the UAE Corporate Tax regime, businesses must not only register but also comply with all reporting and filing obligations. The Federal Tax Authority (FTA) has introduced a structured penalty system to enforce compliance.

Understanding these penalties can help you avoid unnecessary financial losses and stay on the right side of the law.

Common Corporate Tax Penalties in 2025

Here’s a breakdown of the key penalties applicable under UAE Corporate Tax regulations:

Violation	Penalty
Failure to register on time	AED 10,000
Late filing of tax return	AED 500/month (max AED 20,000)
Late payment of tax	14% annually (monthly accrual)
Incomplete/inaccurate return	AED 1,000 (first time)
Repetition of incorrect info	AED 5,000 (for each repetition)
Failure to maintain proper records	AED 10,000 – AED 20,000
Obstruction of audit	AED 20,000 – AED 50,000

Timeline for Penalty Application

• Penalties apply immediately after due dates lapse.
• Daily/monthly accruals may be added to base penalties.
• Interest on underpaid taxes compounds monthly.

FTA may reduce or waive penalties under special circumstances, but only through formal application.

FTA Audits and Risk Triggers

FTA may audit companies based on:

• Discrepancies between financials and returns
• Related party transactions without documentation
• Unusually low or zero profit declarations
• Failure to register when income exceeds threshold

Best Practices to Avoid Penalties

• Register early (especially freelancers or new businesses)
• File tax returns well before deadlines
• Maintain 7 years of accounting records
• Conduct internal tax reviews every 6 months
• Use tax advisory services for accuracy

Final Thoughts

UAE Corporate Tax penalties can be financially and reputationally damaging. As enforcement increases in 2025, compliance is no longer optional. Be proactive, file on time, and maintain accurate records to avoid the cost of non-compliance.

Need Support with Compliance or Reconsideration Requests?

At Think Biz Management Consultancies, we:

• Help you prepare and submit accurate returns
• Assist with penalty reconsideration letters
• Represent you in FTA audits and clarifications

Contact us today to secure your tax compliance position in 2025 and beyond.

 

Contact us today for a free consultation.

Contact number: ‪+971 50 983 0334‬

Email ID: info@alphabets.ae