The Federal Tax Authority (FTA) has reminded UAE businesses that corporate tax compliance is not optional, failure to maintain proper records/file returns on time could result in steep penalties. From keeping 7 years’ worth of financial documents to meeting strict filing deadlines, companies are now under increasing pressure to stay fully compliant as UAE strengthens its corporate tax framework.
Dubai: The Federal Tax Authority (FTA) has delivered a powerful message to all businesses operating under the UAE’s corporate tax regime: maintain your records, file on time, or face escalating penalties.
A Clear Warning
The FTA’s recent advisory underscores two non-negotiable obligations. First, businesses must retain all relevant documentation for at least seven years after the close of each tax period. This includes detailed transaction logs, records of assets and liabilities, and shareholding information—all critical for verifying taxable income. Importantly, companies that are exempt from tax must also preserve records showing their exemption status, which varies depending on the grounds of exemption.
Secondly, the authority reiterated that all corporate tax returns and related payments must be submitted within nine months following the end of the financial year. For instance, firms whose fiscal year ends on 31 December 2025 must complete filing and payment by 30 September 2026. Missing this deadline could trigger immediate administrative penalties.
Why This Matters
UAE’s corporate tax system is grounded in voluntary compliance, with the FTA relying on businesses to act in good faith. However, compliance also demands clear evidence. By preserving meticulous documentation and adhering to deadlines, businesses can shield themselves from audits, fines, and reputational harm. Conversely, poor record-keeping or late filings elevate risk and can quickly turn into costly liabilities.
Sum of Potential Penalties
While the FTA’s official reminder didn’t cite specific fine amounts, independent analysis points to significant financial consequences for non-compliance:
Failure to Register: AED 10,000 fixed fine for late registration—even when no tax is due.
Late Filing: Fines ranging from AED 500 to AED 20,000 depending on the delay and history of non-compliance.
Insufficient Documentation: A flat penalty of AED 20,000 for failing to maintain proper records.
Daily Delays in Providing Information: AED 1,000 per day for delays in responding to FTA communication.
False or Incorrect Returns: Penalties up to 200% of the tax due, making this among the most serious infractions.
These figures reinforce that even seemingly minor oversights can carry stiff financial consequences.
Tools & Support Mechanisms
To streamline compliance, the FTA offers the EmaraTax digital platform—available 24/7—for all corporate tax-related actions, from registration to filing and payment. Users can also enlist help from official, registered tax agents listed on the FTA’s website.
The FTA further recommends reviewing the Corporate Tax Law, Cabinet and Ministerial decrees, and its own guidance documents to ensure full legal alignment.
Proactive Steps to Mitigate Risks
To safeguard against penalties and audits, businesses should adopt a three-pronged strategy:
Solidify Record-Keeping
Maintain clear, organized financial records—including invoices, contracts, bank statements, asset logs, financial statements, and audit reports—for at least seven years. Digital backups and clear labeling help ensure files are readily retrievable during audits.
Adhere to Filing Timelines
Mark critical deadlines—especially the nine-month window from fiscal year-end—for filing and payment submissions. Early preparation and internal checklists can help reduce last-minute errors.
Leverage Expert Guidance
For complex cases—such as inter-group transactions, exemptions, or free-zone-related claims—it’s wise to consult qualified tax agents or advisors. Their expertise helps ensure compliance and audit readiness.
Additionally, businesses should consider preparedness for potential audits. The FTA may initiate reviews if inconsistent data emerges between VAT and corporate tax filings, repeated voluntary disclosures, high volumes of related-party transactions, or when whistleblower tips are filed.
Voluntary Disclosures & Error Handling
If errors are discovered, the FTA allows businesses to submit voluntary disclosures—but only within the stipulated timeframe and with supporting documentation. While this can mitigate penalties, it must be done promptly and accurately. Late or inadequate corrections may result in harsher administrative fines or even penalties tied to the outstanding amounts.
The Bigger Picture
UAE’s introduction of corporate tax reflects its commitment to international tax standards and long-term fiscal sustainability. The regime positions the UAE as a transparent, compliant business hub—but also signals that obligations will be enforced. Compliance isn’t optional—it’s foundational to legally and financially sound operations.
Businesses that remain proactive—prioritizing documentation, timely filings, and legal clarity—will not only ensure peace of mind but will also reinforce investor confidence and operational resilience.
Conclusion
The FTA’s message to UAE businesses is unmistakable: robust record-keeping and timely compliance are your best defenses. Delay or neglect not only risks steep penalties—but also exposes your business to the scrutiny of regulators.
As corporate tax norms continue to evolve, companies must be prepared—and the EmaraTax platform, official guidance, and expert advisors are your allies in navigating this new era of taxation.
