UAE to start penalizing businesses for late registration with tax authority

The UAE will begin to levy a $2,722 (AED 10,000) fine on businesses that do not register with the tax authority on time.

The announcement was made on Tuesday by the Ministry of Finance, following an amendment to the law concerning taxation of corporations and businesses.

The change will go into effect on March 1, 2024.

The administration penalty will be slapped on businesses that do not submit their corporate tax registration applications within the timelines specified by the Federal Tax Authority.

The penalty was implemented to prompt taxpayer compliance with tax laws through timely corporate tax registration, the ministry said in a statement.

The UAE rolled out business tax last June, which is among the lowest compared to other GCC countries, after introducing a five percent value added tax (VAT) in 2018. The Gulf state, like its neighbors, does not levy income tax amid efforts across the region to introduce tax reform.

Business taxes are collected at nine percent from businesses that earn over $102,000 (AED 375,000) in profits.