On 24 January 2022, the Federal Tax Authority (FTA) has called on tax registrants to benefit from the Cabinet Decision to extend the grace period to benefit from the re-determination of administrative penalties on violating tax laws until 31 December 2022, which would make the amount of the total unpaid penalties due until 28 June 2021 equal to 30% of such unpaid penalties, provided the conditions set by the Cabinet Decision are met.
In a press statement the FTA reaffirmed that the Cabinet Decision provided an opportunity for the business sector to benefit from the reduction of the administrative penalties. The Cabinet Decision is in keeping with the wise leadership’s directives to reduce burdens on business sectors and enhance their abilities to contribute more to the growth of the national economy. The Decision is also a part of the FTA’s goal to provide a legislative environment that encourages a high level of tax compliance.
The FTA explained that according to the Cabinet Decision on Re-Determination of Administrative Penalties imposed for violating tax laws, the tax registrant who was not able to fulfill the conditions to benefit from redetermination before 31 December 2021, may fulfill the conditions before 31 December 2022. The FTA called tax registrants to fulfill the requirement to pay the full tax payable, and 30% of the total unpaid administrative penalties that were imposed before 28 June 2021.
The Cabinet Decision stated that the FTA will determine the procedures for implementing the provisions related to the re-determination of administrative penalties imposed for violating tax laws. The FTA confirmed that administrative penalties imposed on the tax registrant will be redetermined within a maximum of 30 business days from the dates specified in the Cabinet Decision, providing all conditions are met.
The FTA clarified that tax registrants who had not met the necessary conditions to benefit from the administrative penalties re-determination by 31 December 2021, can do so by ensuring they meet the conditions by 31 December 2022. First, the administrative penalty should have been imposed under Cabinet Decision No. 40 of 2017 before 28 June 2021, and the amount due was not settled in full before that date. Second, the tax registrant has settled all payable tax by 31 December 2022 (which means that the registrant must not have any tax due at the end of year 2022). And third, the tax registrant has settled 30% of total unpaid administrative penalties due until 28 June 2021, no later than 31 December 2022.
The FTA continues to review and audit the records of tax registrants who have fulfilled the requirements prescribed in the law to benefit from the re-determination of administrative penalties scheme that was imposed under Cabinet Decision No. 40 of 2017 before 28 June 2021, to be equal to 30% of the total unpaid penalties due until 28 June 2021.
The FTA explained that the actual values resulting from the re-determination of administrative penalties have already been reflected in the accounts of many eligible tax registrants who, by 31 December 2021, met the conditions specified per Cabinet Decision No. 49 of 2021 on amending some provisions of the Cabinet Decision regarding Administrative Penalties for Violation of Tax Laws in the UAE, which came into effect on 28 June 2021. For such registrants, the new values after re-determination appeared on the accounts of registrants on the FTA’s e-Services portal; registrants were also informed by emails that the re-determination process had been completed.
The FTA indicated that the review of some tax registrants’ records is still ongoing to identify anyone else eligible to benefit from the re-determination of administrative penalties scheme.