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FTA Re-determines the Administrative Tax Penalties in UAE

FTA Re-determines the Administrative Tax Penalties in UAE

The Federal Tax Authority amends some Provisions of Cabinet Decision No. 40 of 2017 on the Administrative Penalties for Violation of Tax Laws in the UAE. Currently, FTA stated that entities whose total unpaid penalties are due until June 28, 2021, could be settled until December 31, 2021. The new facility encourages tax registrants by redetermining their tax penalties and fines. The taxable person who could not meet the requirements of the tax provision and were unable to settle the liabilities until December 31, 2021 can now take advantage of this redetermination by December 31, 2022.  

The goal of the Amendment

The main objective of the FTA redetermination of administrative tax penalties is to relieve taxpayers and make the UAE a more viable and profitable business location. Through this Amendment, the business sector can reduce its FTA tax penalties. The redetermination provides a chance for registrants to make business accounts highly tax compliant. As a result, foreign investors will flock to the country, boosting the economy. Khalid Ali Al Bustani, Director-General of the FTA, said,

 “Cabinet Decision No. 49 of 2021 aims to support tax registrants to fulfill their tax obligations, boosting the UAE’s competitiveness in doing business.”

How Tax Registrants Benefit from New Decision?

The tax registrant can waive off administrative tax penalties levied in the case of non-compliance before June 28 2021 (the effective date of Cabinet Decision No. 49 of 2021). To benefit from the redetermination of administrative tax penalties under the cabinet decision no. 49 of 2021, the following conditions, must be fulfilled: 

  1. Tax Liability must be settled in full until 31 Dec 2021
  2. 30% of the unpaid penalties must be paid until 31 Dec 2021

In case, the registrant fails to meet the requirement of Points 1 and 2 before 31 Dec 2021, the registrants now have time till 31 Dec 2022 to fulfill the requirements and avail the discount offered by FTA. 

The taxpayer who meets those requirements under Cabinet Decision no 40 of 2017 must settle them no later than December 31, 2022. When completing the process for redetermination of administrative penalties, FTA clarified that registrants could use the “Payment Adjustment Type” feature. With this feature, users can choose to allocate the amounts based on their payment preferences. The options available are to pay tax first, pay the administrative penalties first, or pay the earliest liability first.

Redetermination of administrative penalties is an incentive for businesses to reduce their tax non-compliance fines. If you find any difficulty in availing of this big opportunity, our tax consultants in UAE can assist you in application for waiving your tax penalties as per the new FTA amended provisions.

 

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