What is the penalty for filing a Corporate Tax return late?

Article 4 – Publication and Entry into Force This Decision shall be published in the Official Gazette and shall come into effect on 1 August 2023. Cabinet Decision No. 75 of 2023 and its amendments – As published by Ministry of Finance 3 Table of Violations and Administrative Penalties Annexed to Cabinet Decision No. 75 of 2023 on Violations Related to the Application of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses No. Description of Violation Administrative Penalty Amount in AED 1. Failure of the Person conducting a Business or Business Activity or having a Tax obligation under the Tax Procedures Law or the Corporate Tax Law to keep the required records and other information specified in the Tax Procedures Law and the Corporate Tax Law. Failure of the Person conducting Business or Business Activity or having a Tax obligation under the Tax Procedures Law or the Corporate Tax Law to submit the data, records and documents related to Tax in Arabic to the Authority when requested. Failure of the Registrant to submit a deregistration application within the timeframe specified in the Corporate Tax Law and its implementing decisions. Failure of the Registrant to inform the Authority of any case that may require the amendment of the information pertaining to his Tax record kept by the Authority. One of the following penalties shall apply: 1. 10,000 for each violation. 2. 20,000 in each case of repeated violation within 24 months from the date of the last violation. 2. 3. 4. 5. 6. 5,000 1,000 in case of late submission of the application and on the same date monthly, up to a maximum of 10,000. One of the following penalties shall apply: 1. 1,000 for each violation. 2. 5,000 in each case of repeated violation within 24 months from the date of the last violation. Failure of the Legal Representative to provide 1,000 notification of their appointment within the specified timeframes, in which case the penalties will be due from the Legal Representative's own funds. Failure of the Legal Representative to file a Tax 1. 500 for each month, or part thereof, Return within the specified timeframes, in for the first twelve months. Cabinet Decision No. 75 of 2023 and its amendments – As published by Ministry of Finance 4 7. 8. 9. which case the penalties will be due from the 2. 1,000 for each month, or part thereof, Legal Representative's own funds. from the thirteenth month onwards. This penalty shall be imposed from the day following the expiry date of the timeframe within which the Tax Return must be submitted, and on the same date monthly thereafter. Failure of the Registrant to submit a Tax Return 1. 500 for each month, or part thereof, within the timeframe specified in the for the first twelve months. Corporate Tax Law. 2. 1,000 for each month, or part thereof, from the thirteenth month onwards. This penalty shall be imposed from the day following the expiry date of the timeframe within which the Tax Return must be submitted, and on the same date monthly thereafter. Failure of the Taxable Person to settle the 1. A monthly penalty of 14% per annum, Payable Tax. for each month or part thereof, on the unsettled Payable Tax amount from the day following the due date of payment and on the same date monthly thereafter. 2. For the purposes of this penalty, the due date of payment in the case of the Voluntary Disclosure and Tax Assessment, shall be as follows: a. 20 Business Days from the date of submission, in the case of a Voluntary Disclosure. b. 20 Business Days from the date of receipt, in the case of a Tax Assessment. The Registrant submits an incorrect Tax 500, unless the Person corrects his Tax Return. Return before the expiry of the deadline Cabinet Decision No. 75 of 2023 and its amendments – As published by Ministry of Finance 5 10. The submission of a Voluntary Disclosure by the Taxable Person in relation to errors in the Tax Return, Tax Assessment or Tax refund application pursuant to Clauses 1 and 2 of Article 10 of the Tax Procedures Law. 11. Failure of the Taxable Person to submit a Voluntary Disclosure in relation to errors in the Tax Return, Tax Assessment or Tax refund application pursuant to Clauses 1 and 2 of Article 10 of the Tax Procedures Law, before being notified by the Authority that it will be subject to a Tax Audit. for the submission of the Tax Return according to the Corporate Tax Law. A monthly penalty of 1% on the Tax Difference, for each month or part thereof, to be applied as of the date following the due date of the relevant Tax Return, the submission of the Tax refund application, or the Notification of the Tax Assessment and until the date the Voluntary Disclosure is submitted. The following penalties shall apply: 1. A fixed penalty of 15% on the Tax Difference. 2. A monthly penalty of 1% on the Tax Difference, for each month or part thereof, to be applied as follows: a. Where the Taxable Person submits a Voluntary Disclosure after being notified that it will be subject to a Tax Audit by the Authority, the penalty shall be imposed for the period from the day following the due date of the relevant Tax Return, or the submission of the Tax refund application or Notification of the Tax Assessment and until the date the Voluntary Disclosure is submitted. b. Where the Taxable Person fails to submit a Voluntary Disclosure, the penalty shall be imposed as of the date following the due date of the relevant Tax Return, or the submission of the Tax refund application or Notification of the Cabinet Decision No. 75 of 2023 and its amendments – As published by Ministry of Finance 6 12. 13. 14. Tax Assessment and until the date of issuance of the Tax Assessment. Failure of a Person subject to Tax Audit, his Tax 20,000 Agent or Legal Representative to offer facilitation to the Tax Auditor in violation of the provisions of Article 20 of the Tax Procedures Law, in which case the penalties will be due from the Person’s, Legal Representative’s or Tax Agent’s own funds, as applicable. Failure of a Person to submit, or late 1. 500 for each month, or part thereof, submission of a Declaration to the Authority, for the first twelve months. as required in accordance with the provisions 2. 1,000 for each month, or part thereof, of the Corporate Tax Law. from the thirteenth month onwards. This penalty shall be imposed from the day following the expiry date of the timeframe within which the Declaration must be submitted, and on the same date monthly thereafter. Failure of the Taxable Person to submit a Tax 10,000 Registration application within the timeframe specified by the Authority in accordance with the Corporate Tax Law. 1 1 Added as per Cabinet Decision No. 10 of 2024 Cabinet Decision No. 75 of 2023 and its amendments – As published by Ministry of Finance 7

Article 20 – General Rules for Determining Taxable Income 1. The Taxable Income of each Taxable Person shall be determined separately, on the basis of adequate, standalone financial statements prepared for financial reporting purposes in accordance with accounting standards accepted in the State. 2. The Taxable Income for a Tax Period shall be the Accounting Income for that period, and to the extent applicable, adjusted for the following: a. Any unrealised gain or loss under Clause 3 of this Article. b. Exempt Income as specified in Chapter Seven of this Decree-Law. c. Reliefs as specified in Chapter Eight of this Decree-Law. d. Deductions as specified in Chapter Nine of this Decree-Law. e. Transactions with Related Parties and Connected Persons as specified in Chapter Ten of this Decree-Law. f. Tax Loss relief as specified in Chapter Eleven of this Decree-Law. g. Any incentives or special reliefs for a Qualifying Business Activity as specified Federal Decree-Law No. 47 of 2022 and its amendments – Unofficial translation (as published by the Ministry of Finance) 26 in a decision issued by the Cabinet at the suggestion of the Minister. h. Any income or expenditure that has not otherwise been taken into account in determining the Taxable Income under the provisions of this Decree-Law as may be specified in a decision issued by the Cabinet at the suggestion of the Minister. i. Any other adjustments as may be specified by the Minister. 3. For the purposes of calculating the Taxable Income for the relevant Tax Period, and subject to any conditions that the Minister may prescribe, a Taxable Person that prepares financial statements on an accrual basis may elect to take into account gains and losses on a realisation basis in relation to: a. all assets and liabilities that are subject to fair value or impairment accounting under the applicable accounting standards; or b. all assets and liabilities held on capital account at the end of a Tax Period, whilst taking into account any unrealised gain or loss that arises in connection with assets and liabilities held on revenue account at the end of that period. 4. For the purposes of paragraph (b) of Clause 3 of this Article: a. “Assets held on capital account” refers to assets that the Person does not trade, assets that are eligible for depreciation, or assets treated under applicable accounting standards as property, plant and equipment, investment property, intangible assets, or other non-current assets. b. “Liabilities held on capital account” refers to liabilities, the incurring of which does not give rise to deductible expenditure under Chapter Nine of this DecreeLaw, or liabilities treated under applicable accounting standards as noncurrent liabilities. c. “Assets and liabilities held on revenue account” refers to assets and liabilities other than those held on a capital account. d. An “unrealised gain or loss” includes an unrealised foreign exchange gain or loss. 5. Notwithstanding Clauses 1 and 3 of this Article, the Minister may prescribe any of the following for the purposes of this Decree-Law: a. The circumstances and conditions under which a Person may prepare financial statements using the cash basis of accounting. Federal Decree-Law No. 47 of 2022 and its amendments – Unofficial translation (as published by the Ministry of Finance) 27 b. Any adjustments to the accounting standards to be applied for the purposes of determining the Taxable Income for a Tax Period. c. A different basis for determining the Taxable Income of a Qualifying Business Activity. 6. Subject to any conditions prescribed under Clause 5 of this Article, a Taxable Person can make an application to the Authority to change its method of accounting from cash basis to accrual basis from the commencement of the Tax Period in which the application is made or from the commencement of a future Tax Period. 7. In the case of any conflict between the provisions of this Decree-Law and the applicable accounting standards, the provisions of this Decree-Law shall prevail to that extent.

• • • • • • • • • • To treat a Government Entity’s taxable Businesses as a single Taxable Person;390 To treat an Unincorporated Partnership as a single Taxable Person;391 To treat a Family Foundation as an Unincorporated Partnership;392 To request a clarification from the FTA;393 To request a refund from the FTA;394 To adjust Taxable Income following an adjustment by a foreign tax authority; 395 To move from the Cash Basis of Accounting to Accrual Basis of Accounting;396 To form, join or leave a Tax Group, replace a Parent Company in a Tax Group, or cease to be a Tax Group;397 To deregister for Corporate Tax;398 and To change their Tax Period.399 Tax Returns and payments Consistent with Corporate Tax being a self-assessed regime, Taxable Persons should pay Corporate Tax and file their Corporate Tax Return within 9 months from the end of the relevant Tax Period.400 For example, a Taxable Person with a Financial Year ending on 31 December is required to file their Tax Return and pay Corporate Tax on or before 30 September the following year. Submitting a Tax Return late or a delay in making a payment of Corporate Tax Payable will result in a penalty of: • • AED 500 for each month of delay, or part thereof, for the first twelve months; AED 1,000 for each month of delay, or part thereof, from the thirteenth month onwards.401 390 Article 5(6) of the Corporate Tax Law. 391 Article 16(8) of the Corporate Tax Law. 392 Article 17(1) of the Corporate Tax Law. 393 Article 59(1) of the Corporate Tax Law. 394 Article 49(1) of the Corporate Tax Law. 395 Article 34(11) of the Corporate Tax Law. 396 Article 20(6) of the Corporate Tax Law. 397 Articles 40(1), 40(3), 40(9), 40(10), 40(11) and 40(12) of the Corporate Tax Law. 398 Article 52(1) of the Corporate Tax Law. 399 Article 58 of the Corporate Tax Law. 400 Articles 48 and 53 of the Corporate Tax Law. 401 Cabinet Decision No. 75 of 2023. General Corporate Tax Guide | Corporate Tax | CTGGCT1 119