Federal tax authority has relieved businesses by reducing penalties to facilitate them in filing an accurate tax returns by June 27, 2021. Cabinet Resolution No. (49) of 2021 revises administrative penalties imposed for violations of tax laws.
Among the changes to the penalty regime are the following:
- The late-payment penalty has been revised to be imposed at a rate of 4% monthly (instead of 1% daily) with a cap of 300%.
- Concerning voluntary disclosures, the payment deadline has been re-set to 20 business days from receipt of the voluntary disclosure submission date (instead of the payment deadline of the underlying tax return for which the underpayment arose).
- The amounts of “fixed penalties” in respect to late registration, deregistration or failure to issue tax invoices or tax credit notes are reduced.
The measures are expected to be effective beginning from 27 June 2021.
There is a mechanism for obtaining relief from penalties imposed under the current system, with the amount of penalties to be reduced to 30% of the amount previously imposed as long as certain conditions are met by 31 December 2021. The procedure for claiming this relief has not yet been announced.
(Source – KPMG, UAE)
The FTA director-general called on tax registrants to take advantage of the important benefits provided by the new amendment as it provides more relief to business sectors in order to support their effective contribution to boosting the national economy’s growth.
As part of its ongoing awareness-raising efforts, the FTA has issued two new detailed public clarifications on the amendment within the framework of the public clarification service provided on the FTA’s website https://www.tax.gov.ae/en. These public clarifications aim to familiarise persons with tax aspects which need simplified explanations, enabling them to apply the tax principles accurately and efficiently.
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