UAE’s Federal Tax Authority provides relief to businesses on ‘administrative penalties’

The relief on administrative penalties follows a UAE Cabinet decision. It applies to all penalties imposed before June 28. Image Credit: Pixabay

Dubai: UAE businesses found in violation of tax laws are due for some relief on penalties. This is part of new measures announced by the UAE to support businesses, and also allows for a reworking of unpaid dues on these administrative penalties imposed before June 28.

But three conditions will need to be met before the penalties can be reworked to 30 per cent of the unpaid dues.

• The first condition is that the administrative penalty must be imposed under Cabinet Decision No. 40 of 2017 on Administrative Penalties for Violating Tax Laws in the UAE before 28 June 2021. This is the date of the new decision taking effect.

• The second condition is that the business involved settles all payable tax by December 31, 2021; and

• The third condition requires tax registrants to pay 30 per cent of administrative penalties payable and unsettled by June 28 on or before December 31.

What does the UAE Cabinet decision entail?

The Cabinet Decision No. 49 of 2021 relates to amending some Provisions of Cabinet Decision No 40 of 2017 on Administrative Penalties for Violation of Tax Laws in the UAE. It provides relief as a measure to support businesses

Once all these conditions are met, the FTA (Federal Tax Authority) will, after December 31, re-determine the unsettled payable administrative penalties to be equal to 30 per cent of such unsettled penalties. This will therefore absolve the tax registrant from paying the remaining 70 per cent and the relief will be applied automatically when the registrant fulfills the specified conditions.

Of the violations and administrative penalties, 16 have been amended either in value or in the calculation method stipulated in the Cabinet Decision.