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Key amendments to administrative penalties, waivers and instalments

Key amendments to administrative penalties, waivers and instalments


Cabinet Decree 105 of 2021 issued on 28th December 2021 and will come into effect from 1st March 2022

ParticularsConditions
Administrative Penalties Instalments – The request for instalments must be in respect of unsettled penalties only;​
– The value of penalties subject to instalment should not be less than AED 50,000;​
– Penalties subject to instalment should not be currently disputed with the Tax Disputes Resolution Committee (TDRC) or Federal Courts (excluding the reconsideration process);​
– The amount of tax due for the tax period subject to the instalment request is paid and settled.​
Administrative Penalties Waiver – Death or illness of the taxpayer if the taxpayer is a natural person or owner of an establishment.​​
– Death, illness, or resignation of a key employee of the tax registrant.
– Evidence of restrictions, precautionary or preventive measures, applied on the taxpayer by UAE government agencies.​
– Evidence of system failure of the Federal Tax Authority (FTA), or payment and communication systems failure that affects a class of persons.​
– Causes relating to restrictions on liberty and freedom of a natural person taxpayer or owner of an establishment.
– Payment of all taxes through the tax account of another registered taxpayer.​
– In cases of insolvency or bankruptcy, penalties may be waived if they have been paid prior to the insolvency or bankruptcy, and if it is evident that the insolvency or bankruptcy was not for purposes of tax evasion.​

Procedure on submission of waiver or instalment requests 

A) Application should contain details such as Tax Identification Number, Penalty amount, Reason of request  

B) An undertaking to be filed for

  1. Instalments requests: Penalties will be paid in accordance with payment schedule accepted by the Committee.
  2. Waiver requests: the cause shall be rectified, and the same error will not happen again.

C) Breach of undertaking will make the request null and void. 

D) Not more than one request to be filed for the same penalty.

E) A new payment plan granted by the Committee if explanation is deemed justified.

F) FTA proceeds to collect the penalties from the taxpayer.


Timelines 

  1. 40 days to review the request received by FTA to ensure compliance with all requirements.
  2. The committee has 60 days to review the request and 10 days to notify the taxpayer after the review.
  3. If there is no decision from the Committee, it means the request is rejected.

Retrospective penalty refund 

  1. The Cabinet Decree grants the Committee the authority to lay down the circumstances and guidelines in respect of paid penalties within the previous 5 years.
  2. If paid penalties are waived retrospectively, the paid penalties subject of the waiver will be credited to the taxpayer’s account with the FTA within 90 business days or refunded in cash in case the taxpayer has cancelled their tax registration. 

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