7 Mistakes UAE Businesses Are Making in Their Corporate Tax Registration (And How to Fix Them)

Corporate Tax in the UAE is officially here. Businesses across the country are required to register and comply, starting with their very first Tax Period. Sounds simple enough, right?

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Well, not quite.

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Since the launch of the new Corporate Tax regime, many companies are running into the same avoidable errors, from missing registration deadlines to misunderstanding exemptions. And these slip-ups? They can cost you AED 10,000 or more.

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So, we’re cutting through the confusion. In this blog, we’re walking you through 7 of the most common registration mistakes we’re seeing and exactly how your business can stay on the right side of the law.

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Let’s jump in.

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Mistake 1 – Missing the Corporate Tax Registration Deadline

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What’s happening

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Many businesses are registering too late or not at all for Corporate Tax. Some assume they’re exempt, others simply missed the communication.

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But here’s the thing: the Federal Tax Authority (FTA) imposed a AED 10,000 penalty for missing the deadline.

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The deadline varies depending on when your licence was issued, and the FTA has already made this public.

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How to fix it

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• If you haven’t registered yet, stop everything and submit your application today via EmaraTax.

• If you already missed it, check if you qualify for the penalty waiver initiative (more on that later).

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Mistake 2 – Assuming You're Exempt Without Applying

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What’s happening

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Some entities think they’re exempt, public benefit organisations, investment funds, government-controlled entities, and never register.

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But exemption doesn’t happen automatically. You have to submit an application to the FTA, and it must be approved.

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How to fix it

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• Double check if you fall under Article 4 of the Corporate Tax Law.

• If so, apply for exemption through EmaraTax and still submit your registration on time.

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Mistake 3 – Registering Late but Hoping It’ll Be Overlooked

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What’s happening

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Many businesses submitted late registrations and simply hoped for leniency. But the law is clear.

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Unless you meet the FTA's waiver conditions, you’re still on the hook for AED 10,000.

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How to fix it

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• Check if your first Tax Return or annual declaration was submitted within 7 months of your first Tax Period or Financial Year end.

• If yes, you may qualify for the waiver and get a refund if you already paid.

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Mistake 4 – Not Understanding Who Needs to Register

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What’s happening

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Some businesses don’t realise they even need to register.

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This includes:

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• Natural persons (sole proprietors) with AED 1 million+ in annual turnover

• Foreign companies with income from UAE property

• Free Zone entities with excluded activities or failing de minimis tests

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How to fix it

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• Review Article 11 and the Cabinet decisions carefully

• If your activity meets the thresholds, register regardless of your visa type, nationality, or where you live

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Mistake 5 – Getting Disqualified as a Qualifying Free Zone Person

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What’s happening

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A big one. Many Free Zone businesses expect to enjoy the 0% rate forever but lose that status without realising.

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Failing the substance test, earning too much from non-qualifying sources, or not meeting audited statement requirements will knock you out.

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How to fix it

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• Confirm that you meet all five conditions under Article 18

• Monitor your qualifying income vs total revenue and keep it under 5% or AED 5M (whichever is lower)

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Mistake 6 – Ignoring Related Party and Connected Person Rules

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What’s happening

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Some businesses treat transactions with owners or sister companies casually. But the law treats them as Related Parties or Connected Persons, subject to transfer pricing rules.

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Ignoring this can create registration, compliance, and audit issues.

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How to fix it

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• Identify all Related and Connected Persons

• If you’re a Qualifying Free Zone Person, make sure all transactions meet the arm’s length standard

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Mistake 7 – Filing the Tax Return Too Late for a Waiver

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What’s happening

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A surprising number of businesses were late registering, and just missed the 7-month window to claim the waiver.

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They filed in Month 8 or 9 thinking that was okay. It’s not, for the waiver.

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How to fix it

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• Submit your return before the 7-month cutoff from the end of your first Tax Period

• If you’re not sure when that is, check your EmaraTax account or contact a tax advisor immediately

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Final Word

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The UAE’s Corporate Tax law is very clear but it's also brand new, and many businesses are still adjusting.

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A mistake now can cost you time, money, and peace of mind. But the good news? Most of these errors are fixable, and the FTA has given plenty of opportunities to comply, especially with the latest waiver initiative.

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So take action early, stay informed, and when in doubt, ask. It’s much easier to fix things before the penalties start piling up.

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FAQs

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1. What is the penalty for not registering for Corporate Tax on time?

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AED 10,000 per entity, according to Cabinet Decision No. 75 of 2023.

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2. Who is exempt from Corporate Tax in the UAE?

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Entities under Article 4, including public benefit entities, government entities, certain funds, and qualifying investment vehicles, subject to FTA approval.

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3. How can I get the late registration penalty waived?

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Submit your first Tax Return (or annual declaration, if exempt) within 7 months of the end of your first Tax Period or Financial Year.

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4. Are Free Zone companies automatically tax-free?

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No. They must meet strict criteria to be considered Qualifying Free Zone Persons and enjoy the 0% rate.

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5. What is the de minimis threshold for Free Zone businesses?

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Non-qualifying income must not exceed the lower of AED 5 million or 5% of total revenue.

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6. Do I need to register if I’m a freelancer or sole proprietor?

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Yes, if your business turnover exceeds AED 1 million in a calendar year.

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7. Is the 7-month waiver rule permanent?

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No. It only applies to your first Tax Period or Financial Year.

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8. Do I still need to register if I’m applying for exemption?

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Yes. The application must be submitted, and approval received. Registration deadlines still apply.

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9. What’s the difference between a Related Party and Connected Person?

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A Related Party is tied to you through ownership or control. A Connected Person includes individuals who influence or benefit from your decisions, like shareholders or managers.

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10. Where do I apply for registration or exemption?

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Through the FTA’s official EmaraTax portal.

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11. Can I get a refund if I already paid the AED 10,000 penalty?

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Yes, if you meet the waiver conditions, the amount will be credited to your EmaraTax Corporate Tax account.

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12. Does the penalty waiver apply to future Tax Periods?

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No, the initiative only applies to your first Tax Period or Financial Year.

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Need help?

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We’ve helped dozens of UAE businesses navigate Corporate Tax registration without the stress. Whether you’re unsure about exemption, filing deadlines, or Free Zone eligibility, we’ve got your back.

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Reach out today and let’s fix your tax issues before they turn into penalties.

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