UAE Corporate Tax penalties: late return vs late payment, and the liability where they cross

Missing the UAE Corporate Tax deadline is two violations, not one. The return and the payment fall due on the same day, nine months after the end of the Tax Period (Federal Decree-Law No. 47 of 2022, Articles 53(1) and 48(1)), so for a 31 December 2025 year end both were due on 30 September 2026. But they are penalised separately, on different bases, and which of the two costs more depends entirely on how much tax was owed. This page quotes the two penalties from Cabinet Decision No. 75 of 2023 and recomputes where they cross. It is not tax advice; the Decree-Law, the Cabinet Decisions and the FTA control.

Violation 7: the return is late

Row 7 of the table in Cabinet Decision No. 75 of 2023, as amended, is "Failure of the Registrant to submit a Tax Return within the timeframe specified in the Corporate Tax Law". The penalty is AED 500 for each month, or part thereof, for the first twelve months, and AED 1,000 for each month, or part thereof, from the thirteenth month onwards. It runs from the day after the filing deadline and accrues on the same date each month.

Three features. It does not depend on the tax due, so a nil return that is filed late carries it in full. "Or part thereof" means one day late is one month's penalty. And it steps up after a year: the second year of lateness costs AED 12,000 against AED 6,000 for the first.

Violation 8: the tax is paid late

Row 8 is "Failure of the Taxable Person to settle the Payable Tax". The penalty is a monthly penalty of 14 percent per annum, for each month or part thereof, on the unsettled Payable Tax amount, from the day after the payment due date and on the same date monthly thereafter.

This one scales with the liability and only the liability. 14 percent a year is 1.1667 percent a month, and again a part month is a full month. It is charged on the tax, not on the penalty, so it does not compound.

Where the two cross

Because violation 7 is flat and violation 8 is proportional, there is a level of unsettled tax at which they are equal, and it can be found for any number of months late.

Within the first twelve months both penalties grow by the same fraction each month (AED 500 against 1.1667 percent), so the crossover is the same whatever the delay: about AED 42,900 of unsettled tax, which Bindler rounds to AED 43,000 on the site. Six months late, that is AED 3,000 on the return and AED 3,000 on the payment. Below that liability, the late return is the larger penalty; above it, the interest is. After twelve months the return penalty steps up to AED 1,000 a month while the interest rate does not change, so the crossover rises. Two years late, the return penalty is AED 18,000 (AED 6,000 for the first year, AED 12,000 for the second) and the interest is 28 percent of the tax, so the two are equal at about AED 64,000. A company that has been silent for two years with AED 50,000 of tax owing has paid more in return penalties than in interest.

Two worked points from the Corporate Tax Computation Workbook's verified case, a Resident company with Taxable Income of AED 409,000 and Corporate Tax Payable of AED 3,060:

• Six months late on both: the return penalty is AED 3,000; the payment penalty is 7 percent of AED 3,060, about AED 214. The fixed penalty is fourteen times the interest and nearly equal to the tax itself.
• The same company at AED 900,000 of tax: the return penalty is still AED 3,000; the payment penalty is AED 63,000.

This is why the headline "AED 500 a month" is the wrong number for most readers. It is the right number for a small company and the wrong number for a large one, and only the liability tells you which you are.

Two things the crossover does not include

Late registration is a separate violation with a fixed AED 10,000 penalty (Cabinet Decision No. 10 of 2024, amending Decision 75 of 2023). A company that never registered cannot file and is exposed to all three. Small Business Relief does not switch violation 7 off. The relief (Article 21 of the Decree-Law; Ministerial Decision No. 73 of 2023; extended to Tax Periods ending on or before 31 December 2029 by Ministerial Decision No. 131 of 2026, announced 7 August 2026) is elected in the Tax Return, so the return still has to be filed by the nine-month date. A company with no tax to pay and no return filed owes nothing under violation 8 and the full amount under violation 7.

What to do with a missed date

File first. Every month that passes adds AED 500 to the return penalty regardless of anything else, and the return is what starts the clock on the amount actually owed. Pay second, and pay the tax before the penalties: the interest accrues on the unsettled tax, not on the penalty balance, so reducing the tax stops the running cost.

Where the arithmetic is done for you

The free UAE Corporate Tax calculator runs the Article 20(2) computation for one Tax Period in the browser and prints the filing date from the period end, so the liability that decides which penalty dominates is the first thing you see. The UAE Corporate Tax Computation Workbook ($29, /uae-corporate-tax/) does the same for a real engagement: accounting income to Taxable Income to Corporate Tax Payable in the order Article 20(2) sets, the Small Business Relief and QFZP tests, the carry-forwards and the filing date, with the article or decision cited on every line. Team and consultancy licences are $119 and $249. The deadline by financial year end is in the return deadline guide, and the computation itself in how UAE Corporate Tax is computed.

Sources

• Cabinet Decision No. 75 of 2023 on the Administrative Penalties on Violations Related to the Application of Federal Decree-Law No. 47 of 2022, and its amendments (Cabinet Decision No. 10 of 2024): table rows 7 and 8. Read from the Ministry of Finance PDF: mof.gov.ae/wp-content/uploads/2024/03/Cabinet-Decision-No.-75-of-2023-and-its-amendments-on-the-Administrative-Penalties-for-Violations-Related-to-the-Application-of-Federal-Decree-Law-No.-47-of-2022.pdf.
• Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, Articles 20, 21, 48(1) and 53(1): mof.gov.ae.
• Ministerial Decision No. 73 of 2023 on Small Business Relief; Ministry of Finance announcement of 7 August 2026 on Ministerial Decision No. 131 of 2026.
• The crossover figures are recomputed from rows 7 and 8 above; the AED 3,060 worked case is the verified case in Bindler's workbook.

Last checked against the sources on 28 September 2026.