Corporate Tax Public Clarification on Waiver of Late Registration Penalty (CTP006)
Waiver of Administrative Penalty for failing to submit a Corporate Tax registration application within the deadline
Issue under consideration
- In case of failure of the Taxable Person to submit a Corporate Tax (‘CT’) Registration application within the timeframe specified by the Federal Tax Authority (‘FTA’) in accordance with the CT Law, an Administrative Penalty of AED 10,000 is levied.
- However, recently, the Cabinet approved that the FTA may waive and refund (where paid) the late registration administrative penalty applicable to Taxable Persons and certain categories of Exempt Persons, subject to meeting specific conditions.
Conditions to waive off or avail refund of Late Registration Penalty
The FTA has launched an initiative to waive this late registration penalty provided that a Taxable Person submits its Tax Return within seven months from the end of its first Tax Period, instead of nine months.
Cases covered under the Corporate Tax Public Clarification on Waiver of Late Registration Penalty
- Persons that were subject to a late registration penalty and subsequently became exempt from CT following an application approved by the FTA, may also benefit from this waiver, if they submit their annual declaration within seven months from the end of their first Financial Year, instead of nine months.
- Persons within the scope of this initiative are eligible for this waiver even if the Late Registration Penalty has already been settled. In such case, a refund shall be made by crediting the amount to the person’s EmaraTax account.
- Where the Person has submitted a request to the FTA for reconsideration in respect of the Late Registration Penalty, such request shall be considered null and void, as the late registration penalty will be waived under this initiative.
- Where the Person has submitted a request to the FTA for reconsideration of the late registration penalty, and the reconsideration request has already been approved, i.e. the penalty has already been waived, the Person will not be eligible for a further waiver under this initiative.
- Where a Tax Group files its Tax Return within seven months from the end of the Tax Period, the late registration penalty imposed on any member of the Tax Group shall be waived under this initiative and the amount credited, if applicable, provided that it is the first Tax Period of the member of such Tax Group.
What happens with amount lying in the EmaraTax account
Where the amount of the late registration penalty is credited to the Person’s EmaraTax CT account, the Person may either leave the amount in the account towards settling CT Payable or request a refund of such amount via EmaraTax.
Note: This initiative only applies to the first Tax Period, whether in the past or in the future. This initiative does not affect the deadline of when a Taxable Person must settle the CT Payable to the FTA, which remains payable within nine months from the end of the first Tax Period.
