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Page last updated:: Saturday, December 25, 2021

Few Days Left to Benefit from Administrative Penalties Re-Determination on Taxes Incurred before June 28

Few Days Left to Benefit from Administrative Penalties Re-Determination on Taxes Incurred before June 28 Saturday, December 25,2021

The Federal Tax Authority (FTA) has called on tax registrants to benefit from the redetermination of administrative penalties to be equal to 30% of the total unpaid penalties. The FTA notes that few days are left to benefit on the redetermination on December 31, 2021, in accordance with Cabinet Decision No. 49 of 2021, Amending Provisions of Cabinet Decision No. 40 of 2017 on the Administrative Penalties for Violation of Tax Laws in the UAE, which came into effect on June 28, 2021.

 

In a press release issued today, the FTA clarifies that the Cabinet Decision No. 49 of 2021 outlined three conditions that need to be met in order to benefit from the redetermination of administrative penalties imposed before June 28, 2021. First, the administrative penalty must have been imposed under Cabinet Decision No. 40 of 2017 before June 28, 2021, and that the administrative penalty due was not settled in full before June 28, 2021. Second, the tax registrant should settle all payable tax by December 31, 2021, i.e. not have any due taxes by the end of 2021. Third, the tax registrant should settle 30% of the total unsettled administrative penalties due until June 28, 2021, no later than December 31, 2021.

 

The FTA indicated that, should the registrant meet these conditions, the administrative penalties will be redetermined to equal 30% of the total unpaid penalties, and that will appear on the eServices account of the registrant after December 31, 2021.

 

His Excellency Khalid Ali Al Bustani, Director General of the FTA, said: “Cabinet Decision No. 49 of 2021 aims to support tax registrants to fulfil their tax obligations, boosting the UAE’s competitiveness in doing business.”

 

H.E. renewed the call to benefit from Cabinet Decision No. 49 of 2021, which offers many facilities, including a mechanism to redetermine administrative penalties to be equal to 30% of total unpaid penalties if all conditions set in the Decision are met.

 

“As part of the FTA’s commitment to ensuring the smooth and accurate implementation and to benefit from the redetermination of the administrative penalties, in addition to highlighting the other facilities included in the Decision, the FTA issued two public clarifications about the Decision on its official website several months ago,” H.E. Al Bustani explained. “The public clarifications offered a detailed explanation along with practical examples to explain the mechanism of redetermination of administrative penalties imposed before June 28, 2021, as well as the amendments made to administrative penalties and violations related to the application of Federal Law No. 7 of 2017 on Tax Procedures.”

 

The FTA clarified that when completing the process for redetermination of administrative penalties, registrants can use the “Payment Adjustment Type” feature. The feature allows registrants to allocate the amounts based on their payment preferences. The options available are either to pay tax first, or pay administrative penalties first, or pay oldest liability. To benefit from the redetermination of penalties, registrants should choose their preferred option in order to achieve the intended payment allocation results.

 

The FTA highlighted the importance of ensuring that the tax returns or the voluntary disclosure is submitted before making the payment. If the registrant made the payment before filing the tax return or submitting the voluntary disclosure, and had outstanding administrative penalties in their account, the system will settle the payable administrative penalties, since there is no outstanding payable tax in the registrant’s account at the time of making the payment.

 

The FTA also clarified that it is essential for tax registrants to pay their payable tax before the due date to avoid any late payment penalties. The FTA further clarified that bank transfers can take two or three working days to process the payment. Hence, the period must be taken into consideration to ensure that the FTA receives the payment before the due date.

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