UAE: Any individual, firm can apply for discount, exemption from tax penalty – information

Penalties can be reduced or exempted if the person can demonstrate an acceptable reason for the violation.

The UAE’s Federal Tax Authority (FTA) said Wednesday that any person or group in the country has the right to apply for reduction or exemption from the penalty imposed for violating the country’s tax laws.


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However, individuals and businesses requesting a reduction or exemption must provide a good reason acceptable to the FTA – as well as evidence to justify the existence of the apology and the violation that led to the imposition of administrative penalties.

On May 6, the UAE reduced old VAT and excise tax penalties to help businesses and individuals better cope with the effects of the Covid-19 pandemic.

According to Cabinet Decision No. 49 of 2021, taxpayers for whom fines are currently pending can reduce these by 70 percent, provided they settle them before December 31, 2021.

Going forward, late payment penalties will be reduced to four percent per month, which is a significant reduction of one percent per day, while the cap remains at 300 percent.

UAE Tax Law requires individuals and businesses to notify the Free Trade Agreement of the request for discount or exemption within 40 business days of the end of the acceptable apology.

In addition, the person must prove that the violation has been corrected, and the application for exemption or reduction is submitted according to the form established in the free trade zone.


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The free trade agreement said in a statement Wednesday that no apology should be accepted if the act was deliberate. An apology can only be considered acceptable on the basis of a decision of a tripartite committee formed by a decision of the Director General of the Free Trade Agreement.

This committee will take its decision within 40 working days of receiving the request. Applicants will be informed of this decision within 10 working days.

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