UAE Extends Grace Period for Tax Record Updates Until March 2025 – Avoid Fines!

The Federal Tax Authority (FTA) has extended the grace period for corporate tax record updates until March 31, 2025. Businesses now have additional time to update their records without facing penalties.

This decision is part of the UAE’s commitment to reducing the tax burden on businesses and ensuring smooth compliance with tax laws.

Who Needs to Update Their Tax Records?

Any business registered under Corporate Tax, VAT, or Excise Tax must ensure their details are accurate and updated with the FTA.

What Information Needs to Be Updated?

Registrants must notify the FTA within 20 business days of any changes to:
✅ Business name and address
✅ Email address
✅ Trade license activities
✅ Legal entity type
✅ Partnership agreements (for unincorporated partnerships)
✅ Articles of Association (or equivalent documents)
✅ Nature of business
✅ Any additional business locations

Key Benefits of the Grace Period

✔ Deadline Extension: March 31, 2025
✔ No Administrative Penalties: Any fines previously imposed between January 1, 2024, and March 31, 2025, will be reversed automatically
✔ Easy Process: Updates must be made using the FTA-approved form and mechanism

Practical Examples of Non-Compliance & Associated Penalties

Scenario 1: Change in Trade License Activities (Failure to Inform FTA)

Company A – Tech Innovators FZ-LLC is a free zone company in Dubai operating under a Software Development license. In January 2024, they expanded their business to include IT Consultancy Services, but failed to update their tax records with the FTA within 20 business days.

🔹 Outcome:

  • The FTA identified the discrepancy during a tax audit in June 2024.
  • Penalty: AED 1,000 for failing to notify the FTA about the trade license change.
  • If the company repeats the violation within 24 months, the penalty increases to AED 5,000.

Scenario 2: Change in Legal Entity Type (Failure to Update Tax Records)

GreenMart Trading LLC, registered as a Limited Liability Company (LLC) in 2022, changed to a Sole Establishment in March 2024 due to a change in ownership. However, they did not inform the FTA within the required 20 business days.

🔹 Outcome:

  • The discrepancy was discovered in August 2024 when the company applied for VAT deregistration.
  • Penalty: AED 1,000 imposed for failure to update the legal entity type.
  • If the violation is repeated within 24 months, the penalty increases to AED 5,000.

Scenario 3: Change in Registered Address & Business Operations (FTA Grace Period Applies)

XYZ Manufacturing FZCO moved its warehouse and registered address from Jebel Ali Free Zone (JAFZA) to Dubai Industrial City in December 2023 but did not update the FTA.

🔹 Outcome (Grace Period Applies):

  • Under the FTA’s grace period, valid until March 31, 2025, the company can update its records without incurring penalties.
  • If they fail to update before the deadline, a AED 1,000 penalty will be imposed.
  • Any repeated violation after the grace period results in a AED 5,000 penalty.

Key Takeaways for UAE Businesses

✅ Mandatory Updates: Businesses must update their FTA tax records within 20 business days for changes in trade license, legal structure, business activity, registered address, etc.
✅ FTA Grace Period: Businesses have until March 31, 2025, to correct tax record updates without penalties.
✅ Penalties for Non-Compliance:

  • AED 1,000 per violation
  • AED 5,000 for repeated violations within 24 months

Need Help? We’ll Update Your Records for Just AED 199!

We handle the entire process quickly and hassle-free. Avoid penalties and stay compliant with UAE tax regulations.

🚀 Act Now & Avoid Unnecessary Penalties! 

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