FTA Penalties in 2026: The Real Cost of Late Registration and Filing

The penalty everyone learns about too late

Failing to register for Corporate Tax within the FTA’s timeline costs AED 10,000 — and for new companies the window is just 90 days from incorporation/MOA. Thousands of small businesses have paid this for assuming registration was optional below the AED 375,000 threshold. It is not.

Late returns: the meter runs monthly

Corporate Tax: AED 500/month for the first 12 months of delay, AED 1,000/month after. VAT: AED 1,000 for a first late return and AED 2,000 for repetition within 24 months. These apply per return — a business that ignores two quarters collects two penalties.

Late payment compounds the problem

Beyond fixed filing penalties, unpaid tax accrues percentage-based penalties that grow with time. A modest liability left unpaid for months can double through penalties alone.

Record-keeping fines are real too

Both CT and VAT law require proper books kept for years (7 for CT, 5 for VAT). Inadequate records attract penalties from AED 10,000 — and turn any FTA audit into an estimated assessment where the FTA’s numbers, not yours, decide your tax.

The single root cause

Nearly every penalty file we clean up traces back to the same thing: nobody owned the compliance calendar. Registrations, return dates, payment dates, renewal dates — someone accountable must watch them. That function costs a fraction of one penalty.

Already penalised? You may have options

Many penalties can be contested through a reconsideration request when there are valid grounds — system errors, reasonable excuse, first-time circumstances. As registered tax agents we prepare and file these; the earlier you act after a penalty lands, the better the odds.