Understanding UAE Corporate Tax Penalties for Late Filing and Payment

As the UAE’s corporate tax regime continues to evolve, businesses must stay vigilant about compliance—especially when it comes to filing and paying taxes on time. Missing the deadline for your corporate tax return or payment can lead to significant financial penalties, including monthly fines and accruing interest. In this post, we break down the key consequences of late filing and non-payment under the UAE’s Federal Decree-Law No. 47 of 2022 and related Cabinet Decisions.

📅 Penalties for Late Filing of Corporate Tax Returns

The UAE Federal Tax Authority (FTA) has implemented a structured penalty system to discourage delays in tax return submissions. If your business fails to file its corporate tax return by the due date, here’s what you can expect:

  • AED 500 per month for each month (or part thereof) of delay during the first 12 months.
  • AED 1,000 per month from the 13th month onward.

These penalties continue to accrue until the return is successfully filed. Even a short delay can trigger the first month’s penalty, so it’s crucial to submit on time.

💸 Interest Penalties for Late Payment of Tax

In addition to late filing penalties, businesses that fail to pay their corporate tax by the deadline will incur interest charges. These can compound over time:

A monthly penalty of 14% per annum, for each month or part thereof, on the unsettled Payable Tax amount from the day following the due date of payment and on the same date monthly thereafter. 

This interest is treated separately from the late filing penalty and can significantly increase your total liability if left unresolved.

✅ Final Thoughts: Stay Ahead of Deadlines

With penalties that escalate quickly and interest that compound monthly, timely compliance is not just a legal obligation, it’s a financial imperative. Businesses should maintain robust accounting systems, calendar reminders, and professional support to ensure returns and payments are submitted on time.

We at Accountant’s Box are committed to bringing you clear and practical knowledge about UAE Corporate Tax Penalties and compliance. Our goal is to simplify complex tax laws so that you can focus on growing your business with confidence. Keep reading our blogs and let us know if there are any topics you would like us to explain from a UAE tax law perspective.

Looking to reduce or avoid fines? The Federal Tax Authority (FTA) now allows businesses to waive the AED 10,000 late registration penalty under the UAE Corporate Tax regime. Eligible companies can even claim refunds if conditions are met. Learn more here: How to Get Your Corporate Tax Penalty Waive?

We at Accountant’s Box help SME clients with their accounting and taxation needs. If you would like to connect with us please send in your email at info@accountantsbox.com.