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Change in Tax Penalty Amnesty Deadline: A Guide to UAE Tax Registrants

The Federal Tax Authority (FTA) has extended the grace period for the Tax Penalty Amnesty Scheme to 31st December 2022. The new decision by the FTA has provided much relief for tax registrants as they get more time to prepare and ensure tax compliance in the UAE. The previous deadline was 31st December 2021 and the extension allows you to plan necessary actions with the help of tax agents in the UAE to leverage the new relief provided by the FTA.

The FTA has also issued a new Public Clarification (TAXP004) in this regard, repealing the previous one (TAXP002). As per the new clarification, registrants who had not met the necessary conditions to benefit from the amnesty scheme by 31st December 2021 can do so by 31st December 2022. Tax consultants in Dubai can help you take advantage of the scheme within the prescribed deadline. Meanwhile, you can read ahead to get a clear picture of the conditions governing the scheme.

Redetermination of Administrative Penalties 

The UAE Cabinet Decision No. 49 of 2021 has allowed the tax registrants to predetermined penalties imposed before its effective date, which is 28th June 2021). The determination applies to penalties imposed as per the Cabinet Decision No. 40 of 2017 subject to certain conditions. It applies to all administrative penalties imposed as per Cabinet Decision No. 40 of 2017 whether in respect of tax procedures, VAT or Excise Tax. In addition to that, the government issued Cabinet Decision No. 108 of 2021 which extended the period within which a registrant can benefit from the tax penalty determination in the UAE.

Conditions for Redetermination of Tax Penalties in the UAE

Even though the new decision is a great relief for tax registrants who incurred tax administrative penalties, relevant businesses should be aware of the conditions set out by the FTA. Assessing the conditions will help you determine whether you are eligible for the tax penalty amnesty scheme in the UAE. Consulting with tax agents in Dubai may help you determine your eligibility for the scheme. The following are the conditions you must meet to benefit from the redetermination:

1. The person must have incurred any of the penalties set out in Cabinet Decision No. 40 of 2017 before 28th June 2021

2. The person has not fully settled all the administrative penalties incurred as per Cabinet Decision No. 40 of 2017 before 28th June 2021

3. The taxable person has undertaken any of the following:

a. Settled All payable tax up to 31st December 2021, irrespective of whether the tax was payable before or after 28th  June 2021; and settled 30% of the total unsettled administrative penalties that have been imposed before 28th June 2021

b. Settled all payable tax up to 31st December 2022, irrespective of whether such tax was payable before or after 28th  June 2021.; and settled 30% of the total unsettled administrative penalties that have been imposed before 28th  June 2021.

Once you have met these conditions, the FTA will redetermine the amount of administrative penalty payable and not settled by 28th  June 2021, to equal 30% of that unsettled part. This means you may not require to pay the remaining 70% of the penalty. VAT consultants in Dubai can guide you further on this.

Redetermination of Penalties on the Registrant’s Account

Once you have met the conditions set out as per the Cabinet Decision, the predetermined penalty will be reflected on your e-services account. If the registrant has met the conditions by 31st December 2021, the penalty will be predetermined within 30 business days from 31 December 2021. However, if the tax registrant has not met the conditions on 31st  December 2021 but on 31st  December 2022, the penalty will be redetermined within 30 business days from 31 December 2022. Tax agents in Dubai can help you with more information on the predetermined tax penalties.

Procedure for Redetermination of Tax Administrative Penalties in the UAE

Understanding the procedures related to the Redetermination of Tax Administrative Penalties in the UAE is critical for leveraging the FTA’s Tax Penalty Amnesty Scheme. However, to properly comply with the system, you are advised to hire VAT consultants in Dubai, UAE. To make the process easy for tax registrants, the FTA has kinked the determination process & the relevant data to the e-Services accounts of the tax registrants. By doing so, the registrants are now able to view further information relating to the process on their account’s dashboard.

Hire the Best Tax Agents in Dubai, UAE

The FTA’s decision to extend the deadline for the determination of tax administrative penalties in the UAE is a welcome relief for tax registrants. Tax agents in Dubai advise you to leverage the Tax Amnesty Scheme by ensuring compliance with the procedures. Hiring VAT consultants in Dubai such as Jitendra Chartered Accountants (JCA) is the best way to benefit from the Tax Amnesty Scheme.  JCA is a leading provider of tax consultancy services in the UAE with a commendable reputation. JCA has been providing bespoke services for more than 20 years in the UAE. Our tax agent in the UAE is approved by the FTA and handle all of your tax requirements efficiently. We will provide you with the best advice to take advantage of the Tax Penalty Amnesty Scheme in the UAE.

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