Finance UAE to impose penalty for unpaid corporate tax By Pramod Kumar January 26, 2025, 8:49 AM Reuters/Mohamed Azakir The penalty will apply to the unpaid tax amount and be calculated from the day following the payment deadline The Federal Tax Authority (FTA) said that failure to pay corporate tax will incur a monthly penalty of 14 percent per annum. The penalty will apply to the unpaid tax amount and be calculated from the day following the payment deadline, accruing monthly on the same date, the UAE state-run Wam news agency reported. Tax payments must be made no later than nine months after the end of the relevant tax period to avoid penalties. The UAE increased corporate tax on multinationals to 15 percent of profit from January 1, 2025. The higher rate will apply to companies operating in more than one jurisdiction with consolidated annual revenue of €750 million ($793 million) or more in at least two of the four preceding financial years. The domestic minimum top-up tax amendment comes a year after the Gulf state introduced a 9 percent corporate tax. The Ministry of Finance said in December 2024 that this “strategic step reflects the UAE’s commitment to implementing the Organisation for Economic Co-operation and Development’s two-pillar solution, aimed at establishing a fair and transparent tax system aligned with global standards”. Bahrain said last September that it would also introduce DMTT starting from January 1 next year on large MNEs. Kuwait has also announced an incoming corporate tax rate for large MNEs of 15 percent from the beginning of 2025.
