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Administrative penalties

Applies
FY2024 onwards
Reviewed
Rule
UAE-CT-PEN-2024.1
By

Which law sets UAE Corporate Tax penalties?

The Tax Procedures Law and, for Corporate Tax, the table annexed to Cabinet Decision No. 75 of 2023, as amended.

Per Federal Decree-Law No. 47 of 2022, Article 60, Assessment of Corporate Tax and penalties

A Person may be subject to a Corporate Tax assessment in accordance with the Tax Procedures Law and the decisions issued under it, and the Authority may prescribe the circumstances in which an assessment is requested by a Taxable Person or issued by the Authority. The penalties are determined by the Tax Procedures Law and its implementing decisions — for Corporate Tax, the table annexed to Cabinet Decision No. 75 of 2023, as amended.

The page quotes the schedule entry for the violation a reader names: late registration AED 10,000; a late return AED 500 a month for twelve months then AED 1,000; late payment 14% a year charged monthly; a Voluntary Disclosure 1% a month on the Tax Difference, and 15% plus 1% a month where none is made before an audit. It does not compute a penalty or say one will be imposed.

What Article 60 does, and the schedule it points to

60(1) — assessment

A Person may be subject to a Corporate Tax assessment in accordance with the Tax Procedures Law (Federal Decree-Law No. 28 of 2022) and the decisions issued in the implementation of its provisions.

60(2) — and the Authority's own route

Notwithstanding the Tax Procedures Law, the Authority may prescribe the circumstances and conditions under which a Corporate Tax assessment may be requested by a Taxable Person or issued by the Authority.

60(3) — the delegation

The Tax Procedures Law and the decisions issued under it determine the penalties. For Corporate Tax, Cabinet Decision No. 75 of 2023 applies its own table notwithstanding the general penalties decision (Cabinet Decision No. 40 of 2017).

The table annexed to Cabinet Decision No. 75 of 2023, as amended

  • 1 — Records not kept: AED 10,000; AED 20,000 for a repeat within 24 months
  • 2 — Records not submitted in Arabic on request: AED 5,000
  • 3 — Late deregistration application: AED 1,000, then monthly, up to AED 10,000
  • 4 — Tax record not updated: AED 1,000; AED 5,000 for a repeat within 24 months
  • 7 — Late Tax Return: AED 500 a month or part for the first twelve months, AED 1,000 thereafter
  • 8 — Late payment: 14% a year, charged monthly on the unsettled Payable Tax
  • 9 — Incorrect Tax Return: AED 500, unless corrected before the filing deadline
  • 10 — Voluntary Disclosure: 1% of the Tax Difference a month or part
  • 11 — No Voluntary Disclosure before an audit: 15% of the Tax Difference plus 1% a month
  • 12 — Audit not facilitated: AED 20,000
  • 13 — Late declaration: AED 500 a month for twelve months, AED 1,000 thereafter
  • 14 — Late registration: AED 10,000 (added by Cabinet Decision No. 10 of 2024)

One consequence in the Decree-Law itself

Article 52(2) provides that a Taxable Person shall not be deregistered unless it has paid all Corporate Tax and Administrative Penalties due. An unpaid penalty keeps a Person in the regime, not merely out of pocket.

Order of testing

  1. 1

    Inputs requiring your determination

    Any input a person must decide and has not decided stops the computation. The violation is asked for only where the question is the penalty.

  2. 2

    Cabinet Decision No. 75 of 2023, table item

    The schedule entry for the named violation, quoted with its item number. Nothing is computed, and nothing says a penalty will be imposed on the facts.

  3. 3

    Assessment under the Tax Procedures Law

    Article 60(1) and (2). Assessment runs through that law, and the Authority may prescribe the circumstances in which one is requested or issued.

  4. 4

    Administrative Penalties due, and deregistration

    Article 52(2). An unpaid penalty blocks deregistration.

Examples

Illustrative scenarios — ours, not the authority’s — each computed live by this rule. Change any fact and the outcome is the rule’s, not a hand-written answer.

Asking what a late return costs

A company is three months past its filing deadline and wants to know what the schedule provides.

Computed

Per item 7 of the table annexed to Cabinet Decision No. 75 of 2023, as amended, the Administrative Penalty is AED 500 for each month or part of a month for the first twelve months, then AED 1,000 for each month or part from the thirteenth, running from the day after the filing deadline. Article 60(3) of the Decree-Law leaves penalties to the Tax Procedures Law and its implementing decisions, and this Decision is the one that applies to Corporate Tax. It states the schedule; it does not say a penalty will be imposed on your facts. The Authority imposes the penalty; objection, reconsideration and any waiver run under the Tax Procedures Law, Federal Decree-Law No. 28 of 2022, and its Executive Regulation.

Decided by the cabinet decision no. 75 of 2023, table item 7

Asking what late registration costs

A company registers after the deadline the Authority set.

Computed

Per item 14 of the table annexed to Cabinet Decision No. 75 of 2023, as amended, the Administrative Penalty is AED 10,000, for failing to submit a Tax Registration application within the timeframe the Authority specifies (added by Cabinet Decision No. 10 of 2024). Article 60(3) of the Decree-Law leaves penalties to the Tax Procedures Law and its implementing decisions, and this Decision is the one that applies to Corporate Tax. It states the schedule; it does not say a penalty will be imposed on your facts. The Authority imposes the penalty; objection, reconsideration and any waiver run under the Tax Procedures Law, Federal Decree-Law No. 28 of 2022, and its Executive Regulation.

Decided by the cabinet decision no. 75 of 2023, table item 14

Asking how an assessment comes about

A reader wants to know how the Authority raises an assessment, and whether a Taxable Person can ask for one.

Computed

A Person may be subject to a Corporate Tax assessment in accordance with the Tax Procedures Law, Federal Decree-Law No. 28 of 2022, and the decisions issued under it, per Article 60(1). Article 60(2) adds that, notwithstanding that law, the Authority may prescribe the circumstances and conditions under which an assessment may be requested by a Taxable Person or issued by the Authority — so a taxpayer-initiated route is possible, and the route can be the Authority's own rather than only the general law's. An error the Taxable Person finds in its own return is corrected by Voluntary Disclosure under Article 10 of the Tax Procedures Law, which carries its own penalty.

Decided by the assessment under the tax procedures law

Asking what an unpaid penalty prevents

A company that has ceased trading has an unpaid penalty and wants to deregister.

Computed

An unpaid Administrative Penalty keeps a Person in the regime, not only out of pocket: Article 52(2) provides that a Taxable Person shall not be deregistered unless it has paid all Corporate Tax and Administrative Penalties due and filed all Tax Returns due, including the return for the Tax Period up to and including the date of cessation. The Authority imposes the penalty; objection, reconsideration and any waiver run under the Tax Procedures Law, Federal Decree-Law No. 28 of 2022, and its Executive Regulation.

Decided by the administrative penalties due, and deregistration

Try it

Supply the facts and this rule computes the outcome in your browser, live. Leave a determination undecided and it blocks the result — it is never read as a no.

Not computed yet

1 input still need your determination:

  • What is the question — the penalty for a violation, how a Corporate Tax assessment arises, or what an unpaid penalty prevents?

Computed in your browser from the figures you supply. Nothing is sent anywhere, and the result is a computation against a rule — reference, not tax advice.

Sources

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Reference, not tax advice.

Pankaj Agarwal — Tax Technology Leader