Late corporate tax registration costs AED 10,000§, waived if the first return is filed within 7 months§ of the end of the first tax period. A late corporate tax return costs AED 500 a month, rising to AED 1,000 a month after a year§, and unpaid tax attracts 14% a year, charged monthly§. For VAT, late registration is AED 10,000§ and a late return AED 1,000, or AED 2,000 for a repeat§.
What are the main penalty amounts?
| What went wrong | Corporate tax | VAT |
|---|---|---|
| Registration application late | AED 10,000§ | AED 10,000§ |
| Return filed late | AED 500 a month, rising to AED 1,000 a month after a year§ | AED 1,000, or AED 2,000 for a repeat§ |
| Tax paid late | 14% a year, charged monthly§ | 14% a year, charged monthly§ |
| Required records not kept | AED 10,000, or AED 20,000 for a repeat§ | |
This is the part of the table that affects most small businesses. The decisions also cover voluntary disclosures, tax audits, deregistration and several other cases; read the full texts on the FTA's legislation page.
How does the corporate tax late filing penalty add up?
It is charged per month or part of a month, from the day after the deadline: AED 500 a month for the first twelve months, then AED 1,000 a month. A part month counts as a whole one. A return filed 4 months and a few days late is therefore charged for 5 months, not 4; filed exactly 4 months late it would be AED 2,000. None of that depends on whether any tax was due, so a business on Small Business Relief with a nil computation pays it just the same.
How is late payment charged?
As 14% a year, charged monthly§ on the amount still unpaid, for each month or part of a month. As a rough guide, AED 20,000 left unpaid costs about AED 233 for each month it stays outstanding. Filing and paying are separate failures: a return submitted on time with the money sent late still attracts this penalty. Since 14 April 2026 VAT uses the same annual rate, 14% a year, charged monthly§.
How does the late registration waiver work?
The FTA will waive the AED 10,000§ corporate tax late registration penalty if the tax return for the first tax period is submitted within 7 months§ of the end of that period. An exempt entity that has to file an annual declaration qualifies on the same basis. The waiver applies to businesses already charged the penalty and to those that have not yet registered.
In practice: if you registered late, the first return is the thing to prioritise. Filing it inside the 7-month window turns a fixed charge into nothing. Missing that window keeps the registration penalty and can add late filing penalties on top.
Who has to register, and by when?
A company incorporated on or after 1 March 2024 applies within three months§. A sole trader or freelancer is only in scope once business turnover passes AED 1,000,000§ in a calendar year, and then applies by 31 March of the following calendar year§. For VAT, the application is due within 30 days§ of becoming required to register. The corporate tax guide and the VAT threshold guide explain the tests.
Why is record keeping the costly one?
Deadlines are visible; record keeping is not, until someone asks. The FTA describes the essential documents as transactions, assets, liabilities and ownership interests§, held for 7 years§ after the end of the period they relate to. Failing to keep them costs AED 10,000, or AED 20,000 for a repeat§, which for a small business is more than a year of basic filing fees. Seven years is longer than most cloud accounting subscriptions last in a small business, so export and archive at each year end rather than trusting a platform you may leave.
What should I do if I have already missed a date?
- File the late return or registration now. Monthly penalties stop growing only when the filing is in.
- If registration was late, get the first corporate tax return in within the waiver window.
- Pay what is due separately from filing; the late payment penalty runs on the unpaid amount.
- If a filed corporate tax return was wrong, correct it before the filing deadline if you still can: an incorrect return left uncorrected costs AED 500§ on its own. After the deadline, take it to a registered tax agent before the FTA raises it.
The deadlines guide shows the next return date for common year ends, and the corporate tax calculator works it out for yours.