The Federal Tax Authority has issued a new Cabinet Resolution No. 49 for the year 2021, which will replace the provisions stated in Cabinet resolution No. 40 of 2017.
Highlight: According to the new Resolution, all the present taxpayers who were already imposed with tax penalties as per penalty structure will be eligible to have their unpaid penalties reduced to a mere 30%, if they fulfil certain conditions. This benefit can be availed by complying with the requirements by December 31, 2021.
The list of new penalty structure for VAT as per the unofficial translation of the new Resolution is provided below in the tabular form:
|
No. |
Description of Violation |
Administrative Penalty (AED) |
|
1 |
The person doing business failed to keep the required records and other information specified in the Tax Procedure Law and the tax law. | (1,000) for the first time.
(2,000) in case of repetition |
|
2 |
The person doing business failed to submit data, records and documents related to tax in Arabic to FTA upon request. | (20,000)
|
|
3 |
The taxable person failed to submit the registration application within the time limit specified in the tax law. | (10,000)
|
|
4 |
The Registrant failed to submit a request to cancel the registration within the time limit specified in the tax law. | (1,000) upon delay in submitting the application and on the same date per month, with a maximum of (10,000) |
|
5 |
The Registrant failed to inform FTA of any situation that may require amending the information related to its tax record kept with FTA. | (5,000) for the first time.
(10,000) in case of repetition. |
|
6 |
The legal representative of the taxable person failed to report its appointment as a legal representative of the taxable person within the specified dates, provided that the penalties, in this case, shall be from the legal representative’s own money. | (10,000)
|
|
7 |
The legal representative of the taxable person failed to submit the tax return within the specified dates, within the specified dates, provided that the penalties, in this case, shall be from the legal representative’s own money. | (1,000) for the first time.
(2,000) in case of repetition within (24) months. |
|
8 |
The Registrant failed to submit the tax return within the time limit specified in the tax law.
|
(1,000) for the first time.
(2,000) in case of repetition within (24) months. |
|
9 |
The taxable person failed to pay the tax shown as a tax payable in the tax return or voluntary declaration that was submitted or the tax assessment that was notified within the time limit specified in the tax law.
|
1. The taxable person shall pay the penalty applicable to the late payment of the payable tax, with a maximum of (300%), in accordance with the following:
a. (2%) of the unpaid tax due on the day following the due date for payment, upon late payment of the payable tax. b. (4%) monthly penalty due after one month from the payment due date, and on the same date every month after that, on the amount of tax that has not been paid to date.
2. For the purposes of this penalty, the due date for payment in the event of voluntary declaration and tax assessment is as follows: a. In the case of the voluntary declaration, (20) business days from the date of its submission. b. In the case of tax assessment, (20) business days from the date of its receipt. |
|
10 |
The Registrant submitted an incorrect tax return.
|
1. A fixed penalty is imposed:
(1,000) for the first time. (2,000) in case of repetition.
2. As an exception to Clause (1) of this penalty, if the incorrect tax return results in a tax difference less than the fixed fine mentioned in Clause (1) of this penalty, a fine equal to the tax difference shall be imposed, provided it is not less than AED (500).
3. Whoever corrects its tax return before the payment due date shall be exempted from the penalty specified in Clauses (1) and (2) of this penalty. |
|
11 |
The person/taxpayer makes a voluntary declaration of errors in the tax return, tax assessment or tax refund application, in accordance with Clauses (1) and (2) of Article (10) of the Tax Procedures Law.
|
Without prejudice to the consequences of the penalty mentioned in Clause (10) hereof, a proportional penalty shall be imposed on the amount of the difference between the tax calculated and the tax that should have been calculated, in accordance with the following:
1. (5%) on the difference amount in the event that the voluntary declaration was submitted within one year of the due date of the tax return, tax assessment, or related refund application. 2. (10%) on the difference amount in the event that the voluntary declaration was submitted during the second year from the due date of the tax return, tax assessment, or related refund application.
3. (20%) on the difference amount in the event that the voluntary declaration was submitted during the third year from the due date of the tax return, tax assessment, or related refund application.
4. (30%) on the difference amount in the event that the voluntary declaration was submitted during the fourth year from the due date of the tax return, tax assessment, or related refund application.
5. (40%) on the difference amount in the event that the voluntary declaration was submitted after the fourth year from the due date of the tax return, tax assessment, or related refund application. |
|
12 |
The person/taxpayer fails to make a voluntary declaration of an error in the tax return, tax assessment or tax refund application, in accordance with Clauses (1) and (2) of Article (10) of the Tax Procedures Law, before being notified of FTA’s tax audit.
|
Without prejudice to the consequences of the penalty mentioned in Clause (10) hereof, shall be imposed a person:
1. A penalty of (50%) on the amount of error;
2. A penalty of (4%) for each month or part of the month from any of the following: a. Tax unpaid to FTA, from the date, that payment is due for the relevant tax period until the date of receipt of the tax assessment. b. The tax that has not been refunded to FTA due to an unjust tax refund, from the date of the tax refund from FTA until the date of receiving the tax assessment |
|
13 |
The person doing business failed to provide facilities to the tax auditor in violation of the provisions of Article (21) of the Tax Procedure Law. | (20,000)
|
|
14 |
The Registrant failed to calculate tax on behalf of another person when the registered taxable person is obligated to do so in accordance with the tax law
|
1. The Registrant shall pay the penalty applicable to the late payment of the payable tax, with a maximum of (300%), in accordance with the following:
a. (2%) of the unpaid tax due on the day following the due date for payment, upon late payment of the payable tax. b. (4%) monthly penalty due after one month from the payment due date, and on the same date every month after that, on the amount of tax that has not been paid to date. 2. For the purposes of this penalty, the due date for payment in the event of voluntary declaration and tax assessment is as follows: a. In the case of the voluntary declaration, (20) business days from the date of its submission. b. In the case of tax assessment, (20) business days from the date of its receipt. |
|
15 |
The taxable person failed to calculate any tax that may be due on imported goods in accordance with the tax law. | (50%) of unpaid or undeclared tax.
|
|
16 |
The taxable person failed to present the prices as inclusive of the tax. | (5,000) |
|
17 |
The taxable person failed to report to FTA about its application of the tax on the margin basis. | (2,500) |
|
18 |
Failure to comply with the necessary conditions and procedures for storing goods in a designated zone or moving them to another designated zone. | The penalty shall be the higher of (50,000) or (50%) of the tax, if any, imposed on the goods related to the violation. |
|
19 |
The taxable person failed to issue the tax invoice or alternative document when making any supply | (2,500) for each case discovered. |
|
20 |
The taxable person failed to issue the tax credit note or alternative document. | (2,500) for each case discovered. |
|
21 |
The taxable person failed to comply with the conditions and procedures related to issuing the tax invoice and tax credit note electronically | (2,500) for each case discovered. |
These are some of the latest changes made by the introduction of Cabinet Decision no 49 of 2021. For more details and better clarity, you can read out the blog titled “UAE Tax Penalties Reduced”.
You can even talk to our experts at JAXA Chartered Accountants to understand how this cabinet decision can affect your business. JAXA also provides various other services for your business such as Audit, Accounting, Tax and VAT related services and many more. To know more about these services, feel free to Contact Us. We will be delighted to help you out.
