Date: August 5th, 2023.
On August 1st, 2023, the Federal Government announced a law regarding imposition of penalties for violations of Corporate Law and Tax Procedures.
Penalty is the amount imposed by the authority for violating or breaching the provisions of:
- Tax Procedures Law,
- Corporate Tax Law or
- Decisions issued by the Cabinet for execution.
This law shall come into effect on August 1st, 2023.
List of violations and amount of penalty have been shown in the following table.
| No. | Description of Violation | Administrative Penalty Amount in AED |
| 1. | Failure to keep the required records and other information as required under the Law. | One of the following penalties shall apply:10,000 for each violation.20,000 in each case of repeated violation within 24 months from the date of the last violation. |
| 2. | Failure to submit the data, records and documents related to Tax in Arabic to the Authority when requested. | 5,000 |
| 3. | Failure to submit a deregistration application within the timeframe specified in the law. | 1,000 in case of late submission of the application and on the same date monthly, up to a maximum of 10,000. |
| 4. | Failure to inform the Authority of any case that may require the amendment of the information pertaining to the tax record kept by the Authority. | One of the following penalties shall apply:1,000 for each violation.5,000 in each case of repeated violation within 24 months from the date of the last violation. |
| 5. | Failure of the Legal Representative to provide notification of their appointment within the specified time frames, in which case the penalties will be due from the Legal Representative | 1,000 |
| 6. | Failure of the Legal Representative to file a Tax Return within the specified time frames, in which case the penalties will be due from the Legal Representative. | 500 for each month, or part thereof, for the first twelve months.1,000 for each month, or part thereof, from the thirteenth month onwards.This penalty shall be imposed from the day following the expiry date of the time frame within which the Tax Return must be submitted, and on the same date monthly thereafter. |
| 7. | Failure of the taxable person to submit a Tax Return within the time frame specified in the Law. | 500 for each month, or part thereof, for the first twelve months.1,000 for each month, or part thereof, from the thirteenth month onwards.This penalty shall be imposed from the day following the expiry date of the timeframe within which the Tax Return must be submitted, and on the same date monthly thereafter. |
| 8. | Failure of the Taxable Person to settle the Payable Tax. | A monthly penalty of 14% per annum, for each month or part thereof, on the unsettled Payable Tax amount from the day following the due date of payment and on the same date monthly thereafter.For the purposes of this penalty, the due date of payment in the case of the Voluntary Disclosure and Tax Assessment, shall be as follows:20 Business Days from the date of submission, in the case of a Voluntary Disclosure.20 Business Days from the date of receipt, in the case of a Tax Assessment. |
| 9. | The taxable person submits an incorrect Tax Return | 500, unless the Person corrects his Tax Return before the expiry of the deadline for the submission of the Tax Return according to the Corporate Tax Law. |
| 10. | The submission of a Voluntary Disclosure by the Taxable Person in relation to errors in the Tax Return, Tax Assessment or Tax refund application pursuant to Clauses (1) and (2) of Article (10) of the Tax Procedures Law. | A monthly penalty of 1% on the Tax Difference, for each month or part thereof, to be applied as of the date following the due date of the relevant Tax Return, the submission of the Tax refund application, or the Notification of the Tax Assessment and until the date the Voluntary Disclosure is submitted. |
| 11. | Failure of the Taxable Person to submit a Voluntary Disclosure in relation to errors in the Tax Return, Tax Assessment or Tax refund application pursuant to Clauses (1) and (2) of Article (10) of the Tax Procedures Law, before being notified by the Authority that it will be subject to a Tax Audit. | The following penalties shall apply:A fixed penalty of 15% on the Tax Difference.A monthly penalty of 1% on the Tax Difference, for each month or part thereof, to be applied as follows:Where the Taxable Person submits a Voluntary Disclosure after being notified that it will be subject to a Tax Audit by the Authority, the penalty shall be imposed for the period from the day following the due date of the relevant Tax Return, or the submission of the Tax refund application or Notification of the Tax Assessment and until the date the Voluntary Disclosure is submitted.Where the Taxable Person fails to submit a Voluntary Disclosure, the penalty shall be imposed as of the date following the due date of the relevant Tax Return, or the submission of the Tax refund application or Notification of the Tax Assessment and until the date of issuance of the Tax Assessment. |
| 12. | Failure to facilitate the tax auditors by a taxable Person who is subject to Tax Audit, or his Tax Agent, or Legal Representative, in violation of the provisions of Article (20) of the Tax Procedures Law, in which case the penalties will be due from the Taxable Person, or Legal Representative or Tax Agent, as applicable | 20,000 |
| 13. | Failure of a Person to submit, or late submission of a Declaration to the Authority, as required in accordance with the provisions of the Law. | 500 for each month, or part thereof, for the first twelve months.1,000 for each month, or part thereof, from the thirteenth month onwards. This penalty shall be imposed from the day following the expiry date of the timeframe within which the Declaration must be submitted, and on the same date monthly thereafter. |
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