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Legal Compliance Update for Businesses: AED 10,000 Fine for Late Tax Registration

On 27 February 2024 the Ministry of Finance in Dubai published a new regulation that is of high relevance for businesses registered in the UAE. In the following we will elaborate on everything you need to know regarding this new regulation.

What is the regulation about? 

With the issuance of Cabinet Decision No. 10 of 2024, the Ministry introduces a AED 10,000 fine for businesses if they register their corporate taxes too late. Besides the alignment with regulations of excise tax and value added tax, the intention with this ruling is the fostering of the sense of responsibility among taxpayers. Moreover, it emphasizes the significance of timely compliance. With this groundbreaking decision the rules of violations made in the previous Cabinet decision in 2023 are amended (Cabinet decision No. 75 of 2023). 

When does the regulation become effective?

The regulation is applicable from 1 March 2024 onwards. Thus, it is of utmost importance for you as a business owner, to be aware when to register your corporate taxes and to act accordingly.

The UAE Corporate Tax Law in general

The corporate tax law system was introduced in June 2023, introducing a major shift in the tax landscape of the region within the UAE. After Bahrain, UAE has the lowest corporate income tax worldwide with a standard rate of 9% corporate tax reporting profits exceeding AED 375,000. According to corporate tax law, a company that adopts a fiscal year starting June 2023 and ending 31 May 2024 is subject to corporate tax in June 2023. The first tax return filing is likely to be due towards the end of 2024. Any company that adopts a calendar year starting 1 January 2023 and ending 31 December 2023 will  be subject to corporate taxes starting 1 January 2024 and filing is likely to be due towards mid-2025. 

What is the scope of the law? 

The federal tax system is applicable to all businesses and commercial activities that operate within the seven emirates. However, there are certain exceptions: 

  • Businesses that operate in the extraction of natural resources. They are subject to the tax decrees that are issued by the respective Emirate. 
  • Individuals who earn income in their personal capacity as long as their activity does not require a commercial license.
  • Businesses that are registered in the so called Free Trade Zones, given they comply with all the regulatory requirements and do not conduct business with the Mainland of the UAE 


How Lawfirm can support your business with your timely compliance

To ensure a smooth compliance process we recommend you to research and to understand the conditions of tax registration. Information about the law and the new regulation can be found here. For expert guidance and assistance in navigating the intricate landscape of corporate taxation, please feel free to contact out Lawfirm team. Our experienced professionals are well-versed in the nuances of tax laws and can provide comprehensive support to ensure your timely compliance. Embrace a proactive approach, register on time, and contribute to the nation’s economic prosperity with the support of LawBridge Law Firm. You can book your free consultation here.


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