Free trade agreement amending administrative penalties to help companies meet their tax obligations and improve the competitiveness of the state.
The Federal Tax Authority (FTA) has confirmed that Cabinet Decision No. 49 of 2021 amending some provisions of administrative penalties for violating tax laws in the UAE is designed to assist tax registrants and help them meet their tax obligations, thereby improving the competitiveness of the UAE State in the field of business management.
In a press release released on Saturday, Khalid Ali Al Bustani, director general of the federal tax authority, said the new change will go into effect on June 28, 2021 and will reduce many administrative penalties for violating tax laws.
“This is part of the policy of wise leadership to implement the tax system to the best of standards that will ensure continued economic growth and contribute to transparency and economic dynamism. This creates an ideal and resilient environment for tax legislation that encourages and promotes self-compliance keeps pace with change by constantly making decisions based on incremental demands, ”said Al Bustani.
The Director General of the Free Trade Agreement urged tax registrants to take advantage of the important benefits of the new amendment as it gives more relief to corporate sectors to support their effective contribution to stimulating economic growth.
Noting that the amendment either reduced 16 types of administrative penalties or changed the method of calculation, Al Bustani stated that the cuts included penalties for violations of administrative rules related to tax procedures, the Federal Excise Tax Ordinance Act and the Value Added Tax Ordinance Act.
Al Bustani said the amendment includes fundamental amendments that will provide more opportunities to help taxpayers comply and encourage the expedited voluntary declaration.
“Under these changes, a late payment penalty will not be imposed for voluntary disclosures if the payment is made within 20 business days of filing the voluntary disclosure and the earlier the taxpayer declares and pays the tax due according to the timeframes set in the decision that is an incentive and opportunity for tax registrants who have errors in declarations, tax assessments or tax refund applications to speed up the implementation of voluntary filing procedures and avoid increasing penalties, “he said.
The agency noted in the press release that under the amendment, the free trade agreement redefines the administrative penalties imposed on the tax registrant prior to the new amendment’s entry into force that were not fully paid to 30 percent of the total of those unpaid penalties, emphasizing that the tax registrant, in order to benefit from such a system, is obliged to pay his tax due in full by December 31, 2021 at the latest, and 30 percent of the total administrative penalties due and unpaid by June 27, 2021 by December 31, 2021 at the latest. The free trade agreement lays down the procedures necessary for its implementation.
As part of its ongoing awareness-raising efforts, the FTA has released two new detailed public clarifications on the change through the public clarification service provided on the FTA website. Https://www.tax.gov.ae/en (These public clarifications are aimed at familiarizing individuals with tax issues that require simplified explanations so that they can apply the tax principles accurately and efficiently.
The first public clarification makes some fundamental changes to the table of administrative violations and penalties related to the application of the Federal Law on Tax Procedures to ensure reassurance that these amended penalties will be properly applied. The second public clarification details the mechanism by which some administrative penalties were redefined before the new change came into force on June 28, 2021.