On 28 April 2021, the Cabinet issued Decision No. 49 of 2021 on Amending some Provisions of Cabinet Decision No. 40 of 2017 on Administrative Penalties for Violations of Tax Laws in the UAE (“Cabinet Decision No. 49 of 2021”) Cabinet Decision No. 49 of 2021 amended some of the administrative penalties applicable to certain violations and allowed for a redetermination of some of the penalties already imposed.
On 30 December 2021, Cabinet Decision No. 49 of 2021 was amended by Cabinet Decision No. 108 of 2021 on the Amendment of Cabinet Decision No. 40 of 2017 on Administrative Penalties for Violations of Tax Laws in the UAE (“Cabinet Decision No. 108 of 2021”), with effect from 1 January 2022
To benefit from the redetermination, all of the following conditions have to be met:
- Any of the administrative penalties set out in Cabinet Decision No. 40 of 2017 have been imposed on the person before 28 June 2021;
- The person has not settled all the administrative penalties imposed on the Person as per Cabinet Decision No. 40 of 2017 in full before 28 June 2021
The taxable person has undertaken any of the following: Administrative Penalties
- Settling the following amounts by 31 December 2021
- All payable tax up to 31 December 2021, regardless of whether such tax was payable before or after 28 June 2021
- 30% of the total unsettled administrative penalties referenced above which were imposed before 28 June 2021.
For completeness, please note that, in this context, the settlement means that the FTA must have received the relevant amounts.
Given the specific conditions and deadlines associated with administrative penalty redetermination, businesses should carefully review their tax compliance status and outstanding liabilities. Engaging an FTA-registered tax agent UAE can help taxpayers assess their eligibility for penalty relief, ensure accurate submissions, and communicate effectively with the Federal Tax Authority (FTA). Professional guidance can also reduce the risk of additional penalties arising from non-compliance or incorrect filings.
Where the above conditions are met, the FTA will, redetermine the number of administrative penalties payable and not settled by 28 June 2021, to equal 30% of that unsettled part. Hence, the person shall not be required to pay the 70% remaining part.
Businesses seeking to strengthen their tax compliance processes should consider professional VAT audit services UAE to identify potential reporting gaps and ensure adherence to FTA regulations. A comprehensive VAT review can help organizations validate historical tax records, address compliance risks, and prepare supporting documentation required for penalty reviews or future tax audits.
