TRW & Co · Tax
FTA Penalty Waivers in the UAE: Eligibility and Application
An FTA penalty waiver can cancel the AED 10,000 corporate tax late registration penalty if the first return is filed within seven months, and an FTA committee can waive other penalties in listed circumstances. This guide explains eligibility, how to apply on EmaraTax, the evidence that works, instalment plans and when reconsideration is the better route.
Key pointA waiver request accepts that the penalty was correctly imposed. If the penalty is wrong, file reconsideration within 40 business days first, because the waiver route does not stop that deadline running.
At a glance
Late registration waiver
The AED 10,000 corporate tax penalty is cancelled or refunded to the tax account if the first return is filed within seven months of the first tax period.
Committee waiver
Cabinet Decision No. 105 of 2021 lets an FTA committee waive penalties in listed cases such as death, illness or general system failure.
No tax evasion
No waiver is available where the violation is connected to a tax evasion crime, and only one request is allowed per set of penalties.
Instalment plans
Unpaid penalties of at least AED 50,000 can be spread if no payable tax is outstanding for the period and no dispute is pending.
Decision timeline
The FTA says waiver and instalment requests are decided within 110 business days; silence by the committee counts as rejection.
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The short answer: how an FTA penalty waiver works
An FTA penalty waiver in the UAE comes through one of two routes. The first is the Federal Tax Authority's initiative for the AED 10,000 corporate tax late registration penalty, which cancels or refunds it if the first return is filed within seven months of the end of the first tax period. The second is a discretionary waiver by an FTA committee under Cabinet Decision No. 105 of 2021, available only in listed circumstances and never where the violation is linked to tax evasion.
Two related tools are often confused with waivers. An instalment plan spreads payment of correct penalties of at least AED 50,000. Reconsideration challenges a penalty that should not have been imposed at all, and has a strict 40 business day deadline. Choosing the wrong route wastes time and can close the right one.
This guide, current as of October 2026, explains each route, eligibility, the EmaraTax application, timelines, evidence and what to do if a request is refused. For the underlying penalty amounts, see our guides to corporate tax penalties and VAT penalties.
The legal framework
Penalties are imposed under Federal Decree-Law No. 28 of 2022 on Tax Procedures and the penalty schedules: Cabinet Decision No. 75 of 2023 for corporate tax, and Cabinet Decision No. 40 of 2017 for VAT and excise, the latter substantially amended from 14 April 2026.
Waivers, instalments and refunds of penalties are governed by Cabinet Decision No. 105 of 2021 on controls and procedures for paying administrative penalties in instalments and for waiving or refunding them, effective from 1 March 2022. It sets up an FTA committee that decides requests, with Article 3 covering instalments and Article 4 covering waivers. The FTA describes the procedure on its instalment, waiver and refund service page.
The corporate tax late registration initiative is separate. It is an FTA initiative published on its waiver of penalties page, and it applies only to the late registration penalty. The legislation itself is on the FTA legislation page.
A waiver request does not stop the clock on reconsideration. If you believe a penalty is wrong in fact or law, file a reconsideration request within 40 business days of notification first. A waiver is for penalties that were correctly imposed but should be forgiven.
Route 1: the corporate tax late registration waiver
The FTA initiative targets one penalty: the fixed AED 10,000 for registering late for corporate tax. The condition is simple. A taxable person must file its first corporate tax return within seven months of the end of its first tax period. An exempt person that files an annual declaration instead must file it within seven months of the end of its first financial year. Everything must be submitted through EmaraTax.
| Position | What to do | Result |
|---|---|---|
| Registered, penalty unpaid, first return already filed within seven months | Nothing further | Penalty waived |
| Registered, penalty unpaid, first return not yet filed | File within seven months | Penalty waived |
| Registered, penalty paid, first return not yet filed | File within seven months | Amount refunded to the tax account |
| Registered, penalty paid, first return filed within seven months | Nothing further | Amount refunded to the tax account |
| Not yet registered | Register now, then file within seven months | Any penalty imposed is waived |
The waiver is applied by the FTA once the condition is met; the scenarios above come from the FTA's own page. Note that refunds go to the EmaraTax tax account, where they can be set against other liabilities or claimed under the normal refund rules. The FTA page sets no closing date, but this is an initiative rather than a statutory right, so check the page again before relying on it.
The seven-month window is shorter than the nine-month filing deadline. For a company with a calendar year, a first tax period ending on 31 December means a waiver deadline of 31 July of the following year, two months before the return is otherwise due. Our article on corporate tax registration and return deadlines explains how the first period is fixed.
Route 2: the committee FTA penalty waiver under Cabinet Decision No. 105 of 2021
For all other penalties, an FTA penalty waiver depends on the committee. The decision sets threshold conditions and a list of qualifying cases.
Threshold conditions
- The violation must not be connected to a tax evasion crime.
- The request must be filed within the period the committee sets.
- The applicant must give an undertaking that the violation has been corrected and will not be repeated.
- Only one request may be made for the same set of penalties.
Qualifying cases
The decision lists the circumstances in which the committee may waive: the death or illness of a registered individual or sole establishment owner that directly caused the failure; the death, illness or resignation of a key employee proved to be the direct cause; government restrictions or precautionary measures; a general failure of the FTA's systems, payment gateways or telecommunications affecting a category of persons; a custodial sentence of the registered person or owner; obligations met and tax paid through another registered person's account; and insolvency or bankruptcy where pre-declaration taxes were settled. A final category lets the committee consider other cases it assesses.
The final category gives some flexibility, but it is not a general forgiveness power. Requests that rely on it succeed when the evidence shows a genuine cause outside normal business control, prompt correction and a clean compliance record. Pressure of work, an accountant leaving without a proper handover or ignorance of the law are weak grounds on their own.
Waiver amount
The committee decides how much to waive, so a request can succeed in part. Refunds of penalties already paid are also possible in the cases and under the rules the committee sets, and are credited to the tax account.
Instalments and reconsideration compared
Instalments are available under Article 3 of the decision where penalties are correct but large. The penalties must be unsettled and total at least AED 50,000, an amount the committee may change. The applicant must not owe payable tax for the tax period concerned, and the penalties must not be disputed before the Tax Disputes Resolution Committee or the courts, other than through reconsideration. The committee can ask for a guarantee.
| Feature | Waiver | Instalments | Reconsideration |
|---|---|---|---|
| Purpose | Forgive a correct penalty | Spread payment of a correct penalty | Cancel or reduce a wrong penalty |
| Legal basis | Cabinet Decision No. 105 of 2021, Article 4 | Cabinet Decision No. 105 of 2021, Article 3 | Tax Procedures Law |
| Deadline | Period set by the committee | While penalties are unpaid | 40 business days from notification |
| Key condition | Listed case; no tax evasion | At least AED 50,000; no payable tax for the period | Error of fact or law |
| Next step if refused | Limited; legal advice needed | Pay in full | Tax Disputes Resolution Committee, then the federal courts |
The reconsideration procedure is the gateway to the dispute system. An objection to the Tax Disputes Resolution Committee is inadmissible unless reconsideration was first sought and the disputed tax paid. Our article on FTA audits, penalties and disputes explains the stages.
How to apply on EmaraTax
- Identify the right route. Decide whether the penalty is wrong (reconsideration), correct but caused by a listed circumstance (waiver) or correct but large (instalments). If the penalty is the corporate tax late registration penalty, check the seven-month initiative first.
- Correct the underlying violation. File the missing return, register, update the record or pay the tax. The committee expects the problem fixed before it forgives the penalty, and the undertaking says so.
- Assemble evidence. Collect documents proving the circumstance and its direct link to the failure, with a short chronology.
- Log in through UAE Pass. FTA services are accessed through EmaraTax with UAE Pass. Open the penalty waiver or instalment request from the dashboard.
- Complete the form and attach documents. Identify each penalty, its date and amount, the violation and the reasons, and attach the evidence and undertakings.
- Submit and diarise. The service is free. The FTA says requests are decided within a period not exceeding 110 business days of receipt, so plan cash flow on the basis that the penalty may stand.
- Respond to requests promptly. The committee may ask for further documents. Late or incomplete responses weaken the request.
Under the decision, the FTA reviews the request and passes qualifying requests to the committee within 40 business days, and the committee then has 60 business days to decide; no response within that period is treated as a rejection.
Documents and evidence that make a difference
A successful FTA penalty waiver request is built on evidence of cause, timing and correction.
- Proof of the circumstance: death certificates, medical reports with dates, resignation letters and handover records, government notices or FTA system outage notices.
- Causation: a dated chronology showing why the circumstance directly caused the missed deadline, and who else could or could not have acted.
- Correction: screenshots of the filed return, registration or payment, with dates, showing the violation has been fixed.
- Compliance history: a clean record of prior on-time filings and payments strengthens the case.
- Controls: a short note of what has changed, such as delegated EmaraTax access or a tax calendar, supporting the undertaking not to repeat the violation.
The written submission matters as much as the attachments. Keep it short and structured: the penalties concerned, the listed case relied on, the facts in date order, the link between the circumstance and each missed deadline, and the corrective action taken. Cross-refer every statement to a numbered document. Committees read many requests, and an FTA penalty waiver application that makes the causal link obvious on the first page is far easier to approve than a long narrative.
Translate key documents into Arabic where they are in another language, and make sure names, dates and TRNs match the EmaraTax record exactly. Inconsistencies between the request and the tax record are a common reason for follow-up questions and delay.
Common mistakes and an illustrative scenario
Using a waiver request when the penalty is wrong
If the FTA imposed a penalty on the wrong dates, applied the wrong amount or penalised a return that was in fact filed on time, the correct route is reconsideration within 40 business days. A waiver request accepts the penalty and asks for mercy, and the reconsideration deadline keeps running in the meantime. File reconsideration first where there is a real argument.
Applying before the violation is fixed
The undertaking requires the applicant to confirm that the violation has been corrected. A request filed while the return is still missing or the tax unpaid is unlikely to succeed and uses up the single request allowed for that set of penalties. Fix the underlying problem, then apply.
Relying on general hardship
Cash flow pressure, staff turnover and unfamiliarity with the law are common explanations but do not match the listed cases. They may support an instalment plan if the amount is large enough, but a waiver request built on them alone has weak prospects. Focus the request on the specific listed circumstance and its direct effect.
Missing the seven-month window
Many businesses treat the nine-month return deadline as the target and miss the earlier seven-month date that triggers the late registration waiver. Once that window has passed, the initiative no longer applies on its terms and the business is left with the narrower committee route.
Illustrative only; the business and figures are hypothetical. A sole establishment trading in Sharjah missed two VAT returns while its owner was in hospital for several weeks, and no one else held EmaraTax access. Late filing and late payment penalties followed. On recovery, the owner filed both returns, paid the tax, and applied for a waiver citing illness, with hospital records showing admission and discharge dates that covered both deadlines, a chronology and evidence of a prior clean record. The owner also added a second authorised user. That is the kind of request the listed cases are designed for; the outcome remains at the committee's discretion.
Mainland, free zones and what to do next
Waivers are federal: the same rules apply to mainland, free zone, DIFC and ADGM businesses, and only the FTA can waive FTA penalties. Free zone authorities and financial centre regulators have no role. Foreign-owned groups should also check whether a penalty or waiver affects disclosures in group accounts or tax positions abroad, for example in the UK, India or Singapore.
- List every open penalty with its date, amount and legal basis.
- For each, decide: reconsideration, waiver, instalments or payment.
- Diarise the 40 business day reconsideration deadline from each notification.
- For the corporate tax late registration penalty, calculate the seven-month date and file by then.
- Correct the underlying violation before any waiver request.
- Prepare a single, well-evidenced request for each set of penalties.
The return filing, bookkeeping and tax account reconciliations behind a request are delivered with our group company A&A Consultancy. TRW & Co covers the legal and regulatory side: choosing the route, drafting the FTA penalty waiver or reconsideration submission and handling any dispute, working alongside registered tax agents and, before the courts, locally licensed advocates. TRW & Co is not a registered tax agent. See our page on tax disputes in the UAE, or contact our Dubai team at info@trw.co or +971 58 942 1012.
Frequently asked questions
01Who is eligible for the corporate tax late registration penalty waiver?
Any business that incurred, or would incur, the AED 10,000 corporate tax late registration penalty can benefit if it files its first corporate tax return within seven months of the end of its first tax period. Exempt persons qualify by filing their annual declaration within seven months of the end of their first financial year. Unpaid penalties are waived and paid penalties are refunded to the EmaraTax tax account. Businesses not yet registered should register and then meet the same condition.
02How long does an FTA penalty waiver request take?
The FTA says requests for waiver or instalments are decided within a period not exceeding 110 business days from receipt. Under Cabinet Decision No. 105 of 2021, the FTA reviews the request and passes qualifying requests to its committee within 40 business days, and the committee has 60 business days to decide. If the committee does not respond in that time, the request is treated as rejected, so plan cash flow on the basis that the penalty may stand.
03Does it cost anything to apply for a penalty waiver?
No. The FTA lists the instalment, waiver and refund request service as free of charge. The request is submitted through EmaraTax, accessed with UAE Pass, using the penalty waiver or instalment option on the dashboard. Costs arise only from preparing the evidence and submission, for example obtaining medical records or professional help with the chronology and legal analysis.
04What reasons does the FTA accept for waiving penalties?
Cabinet Decision No. 105 of 2021 lists the death or illness of a registered individual or sole establishment owner; the death, illness or resignation of a key employee directly causing the failure; government restrictions; a general failure of FTA systems, payment gateways or telecoms; a custodial sentence; tax paid through another registered person; and insolvency or bankruptcy where earlier taxes were settled. The committee may also consider other cases, but the violation must not be connected to tax evasion.
05What is the difference between a waiver and reconsideration?
Reconsideration challenges a penalty that is wrong in fact or law, for example miscalculated dates or a return that was filed on time. It must be filed within 40 business days of notification and leads to the Tax Disputes Resolution Committee if refused. A waiver accepts that the penalty was correctly imposed but asks the FTA committee to forgive it because of a listed circumstance. Where both are arguable, file reconsideration first so the deadline is protected.
06Can I pay FTA penalties in instalments instead?
Yes, if the unpaid penalties total at least AED 50,000, an amount the committee may adjust, the business does not owe payable tax for the tax period concerned, and the penalties are not under dispute other than through reconsideration. The request is made on EmaraTax with an undertaking to pay according to the approved schedule, and the committee may require a guarantee. Instalments do not reduce the amount owed; they only spread it.
Sources and official materials
- Federal Tax Authority: Waiver of penalties — Corporate tax late registration penalty waiver initiative
- FTA: Requests for instalment, waiver and refund of administrative penalties — Cabinet Decision No. 105 of 2021 conditions and EmaraTax steps
- FTA: New procedures for reconsideration requests — Reconsideration, TDRC and court timelines
- Cabinet Decision No. 75 of 2023 and its amendments (Ministry of Finance) — Corporate tax penalty schedule
- Cabinet Decision No. 40 of 2017 and its amendments (Ministry of Finance) — VAT and excise penalty schedule from 14 April 2026
- Federal Tax Authority: Legislation — Tax Procedures Law and Cabinet Decisions
General information only, current as at 27 October 2026. It is not legal advice and does not create a lawyer–client relationship. UAE law differs between the onshore jurisdiction, the DIFC, ADGM and the free zones, and changes frequently; check current official sources and take advice on the facts of your matter.
