UAE tax penalties reduced and discounts granted

UAE tax penalties reduced and discounts: On 28 April 2021, the UAE Cabinet of Ministers issued Decision No. 49/2021 amending provisions of Cabinet Decision No. 40/2017 regulating tax penalties (the “new Decision”)

UAE tax penalties reduced and discounts: highlights

• Late payment penalties reduced from 1% per day to 4% per month.
• 300% cap still applies.
• New starting date for calculating late payment penalties.
• Reductions for prior penalties to be made.
• UAE Cabinet of Ministers issued Decision No. 49/2021  on  April 28, 2021.
• Effective date of UAE Cabinet of Ministers Decision No. 49/2021 is sixty days from the issuance date.

Penalty calculation:

Most notable of the new amendments is that the late payment penalties have been reduced from 1% per day to 4% per month. The 300% cap on the late payment penalties still applies. The new calculation of late payment penalties will be calculated as follows:

• 2% of the unpaid tax immediately past the due date.
• 4% per month thereafter commencing a month after the due date

The new Decision states that the due date for the purposes of calculation late payment penalties shall be:

• 20 business days from the date of submission  the voluntary disclosure.
• 20 business days  from the date of tax audit report receiving date.

UAE tax penalties reduced and discounts : previous penalties:

The new Decision grants the Federal Tax Authority the right to reduce previously unpaid penalties to 30% of the total of such penalties in case the following conditions are met:

• The penalties were applied under the previous Cabinet Decision No. 40/2017 regulating tax penalties.
• The registrant has paid all taxes due by 31 December 2021 at most.
• By 31 December 2021 at most the registrant must have paid 30% of the total tax penalties owed until the coming into effect of the new Decision (i.e., sixty days as of 28 April)
  

Source Wasel & Wasel

UAE Cabinet of Ministers issued Decision No. 49/2021 amending provisions of Cabinet Decision No. 40/2017 regulating tax penalties (the “new Decision”)

Detailed Table below:

Violation Description	Administrative Penalty (AED)
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.
The person doing business failed to submit data, records and documents related to tax in Arabic to FTA upon request.	(20,000)
The taxable person failed to submit the registration application within the time limit specified in the tax law.	(10,000)
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)
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.
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)
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.
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.
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…

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