Key takeaways
- There is no extension: the FTA confirmed on 26 September 2026 that FY2025 returns and payments were due by 30 September.
- A late return costs AED 500 a month or part month for the first 12 months, and unpaid tax attracts a penalty of 14% a year, applied monthly.
- File first, even if you cannot pay in full: the filing penalty stops when the return is in, and every part payment reduces the payment penalty.
- An error costs 1% a month to correct by voluntary disclosure, against 15% plus 1% a month if the FTA finds it in an audit first.
For businesses with a financial year ending 31 December 2025, the corporate tax deadline for both the FY2025 return and the payment was 30 September 2026. The Federal Tax Authority (FTA) confirmed on 26 September that there would be no extension. Two penalties therefore began to run on 1 October, and both increase every month. The decisions taken in the next 30 days will determine most of the final cost, and the order in which they are taken matters as much as the speed.
For a group, the exposure is per entity. Each company that missed the date carries its own filing penalty, and each unpaid liability carries its own payment penalty.
What is running now
Corporate tax penalties are set by Cabinet Decision No. 75 of 2023, as amended by Cabinet Decision No. 10 of 2024, and that table has not changed since. The penalty reform that took effect in April 2026 (Cabinet Decision No. 129 of 2025) changed penalties under the VAT, excise and tax procedures rules, not the corporate tax table.
Two penalties apply to a late FY2025 return:
| Penalty | How much | What stops it |
|---|---|---|
| Late return | AED 500 for each month or part month, for months 1 to 12; AED 1,000 a month from month 13 | Filing the return |
| Late payment | 14% a year on the unpaid tax, applied monthly (about 1.17% a month or part month), from the day after the due date | Paying the tax |
Three consequences follow. A part month is charged as a full month, so one day into a new month adds another charge. The filing penalty does not depend on the tax due: a nil return, a loss-making company and a business electing Small Business Relief all pay it in the same way. And the payment penalty is charged only on what remains unpaid, so it falls as soon as some or all of the tax is settled.
A worked example: AED 90,000 of tax, three months late
An FY2025 return shows corporate tax of AED 90,000. The return is filed and the tax paid in the third month after the deadline, so both penalties have run for three months.
| Item | Calculation | AED |
|---|---|---|
| Late return | 3 months × AED 500 | 1,500 |
| Late payment | AED 90,000 × 14% ÷ 12 × 3 months | 3,150 |
| Penalties | 4,650 | |
| Corporate tax | 90,000 | |
| Total cost | 94,650 |
The late-payment penalty is AED 1,050 for every month the AED 90,000 remains unpaid. Changing only the timing shows where the cost comes from:
| Return filed in | Tax paid in | Late return (AED) | Late payment (AED) | Total penalties (AED) |
|---|---|---|---|---|
| Month 1 | Month 1 | 500 | 1,050 | 1,550 |
| Month 1 | Month 3 | 500 | 3,150 | 3,650 |
| Month 3 | Month 3 | 1,500 | 3,150 | 4,650 |
| Month 12 | Month 12 | 6,000 | 12,600 | 18,600 |
Month 1 is the first month, or part of a month, after 30 September. Filing in month 1 and paying in month 3 saves AED 1,000 compared with doing both in month 3. Leaving everything for a year takes the penalties to AED 18,600, more than a fifth of the tax itself. The penalty estimator applies the same arithmetic to your figures.
Your next 30 days after the corporate tax deadline
1. File the return, even if the tax cannot be paid yet
The filing penalty stops when the return is submitted on EmaraTax, the FTA's online portal. Holding the return back until the cash is available only adds AED 500 a month. Filing also fixes the tax figure on which everything else depends.
File as soon as the numbers are right, and not before: a rushed return containing errors creates a second problem (step 4). If the audit is the obstacle, confirm whether one is required. For tax periods starting on or after 1 January 2025, audited financial statements are required where revenue exceeds AED 50 million, for every Qualifying Free Zone Person (QFZP) and for every Tax Group, whatever its size (Ministerial Decision No. 84 of 2025). Where one applies, the audit is on the critical path, and a sign-off date should be agreed with the auditor this week.
A business that never registered for corporate tax must register first, and the AED 10,000 late-registration penalty applies (see step 3). If you would like us to take the return on, see corporate tax return filing.
2. Pay what you can, as soon as you can
The 14% penalty is charged on the tax that remains unpaid, so a part payment reduces it immediately. Every AED 10,000 paid saves about AED 117 for each month it would otherwise have stayed outstanding.
Before paying, check the EmaraTax account for credit balances. Where a late-registration penalty was paid and later waived, the AED 10,000 was credited to the corporate tax account and can be used against what is owed.
3. Check the late-registration waiver if this is a first return
For a business that registered late, the AED 10,000 penalty is waived, or credited back if paid, when the first return is filed within seven months of the end of the first tax period (FTA Public Clarification CTP006). The FTA has not published an end date for the waiver, but each taxpayer's seven-month window closes on its own date.
Where the first tax period ended on 31 December 2025, the window closed on 31 July 2026, and filing now cannot reopen it. Where the first tax period ended on 31 March 2026, the window closes on 31 October 2026, a Saturday, so the safe course is to file by Friday 30 October. That is two months ahead of the normal deadline of 31 December 2026.
The waiver covers the registration penalty only. It does not move the nine-month deadline for paying the tax, and it is not granted twice. Our corporate tax registration page sets out the rules in more detail.
4. Correct errors by voluntary disclosure
Once the return is in, any error found in it, or in the FY2024 return, should be corrected by voluntary disclosure. The penalty is 1% a month on the tax difference, from the original due date to the date of disclosure. If the FTA gives notice of a tax audit first, it becomes 15% of the difference plus 1% a month.
Suppose a missed add-back understated FY2025 tax by AED 20,000, and it is disclosed four months after the original due date: 1% × 4 × AED 20,000 = AED 800. If the FTA found the same error in an audit, the fixed 15% alone would be AED 3,000, before the monthly charge.
Since 1 April 2026 (Cabinet Decision No. 17 of 2026), an error of more than AED 10,000 needs a voluntary disclosure within 20 business days, while one of AED 10,000 or less can be corrected in the next return. Tax shown by a disclosure is due 20 business days after it is submitted; after that, the 14% late-payment penalty applies. See penalties and voluntary disclosures.
5. Request reconsideration where there are grounds
A penalty can be put to the FTA for reconsideration through EmaraTax. The FTA decides each request on its own facts, there is no automatic relief, and requests are time-limited, so a penalty notice should not be left unanswered. Nor should a request delay steps 1 and 2: questioning penalties already charged does nothing to stop new ones accruing.
Beyond the next 30 days
For a calendar-year business, the FY2026 return and payment are due by 30 September 2027. Other year ends follow the same nine-month rule, so a year ended 31 March 2026 is due by 31 December 2026. The deadline finder and the tax calendar give the dates for each entity.
The more lasting work is on the cause. Where late books or a late audit caused the delay, the fix is an earlier close and an audit booked well before year end.
Records must be kept for seven years after the end of the tax period (Federal Decree-Law No. 47 of 2022, Art. 56), and the FTA can audit a period for five years after it ends.
How ebs can help
ebs Chartered Accountants is an FTA Registered Tax Agency (TAN 30022834). We prepare and file late returns, calculate the penalties to date, prepare voluntary disclosures and, where there are grounds, prepare and file reconsideration requests; the FTA decides the outcome. The first consultation is free: contact us and we will set out what to file first.
This article is general information as at 2 October 2026, not advice on your specific circumstances. Tax rules change; check the current position before acting.