UAE: New rules on administrative penalties waivers and installments

UAE: New rules on administrative penalties waivers and installments

A new Cabinet Decree No. 105 of 2021 was issued on 28th December 2022 by the Federal Tax Authority on Controls and Procedures for paying administrative penalties by instalments and waiving and refunding administrative penalties.

The new decree will come into effect on 1st March 2022.

Details

The approval requests regarding the administrative penalties would be subject to the following conditions:

UAE: New rules on administrative penalties waivers and installments
  1. The installment request must be for unsettled penalties
  2. The penalty amount should not be less than AED 50,000
  3. The Administrative Penalties, which are the subject of the Request to pay by instalments, shall not be subject to dispute before the Tax Dispute Resolution Committee, the competent courts
  4. The Person should not owe any payable tax in respect of the tax period which is the subject of the Request

Administrative penalties waivers

The administrative penalties subject to penalties should not be in connection with the tax evasion crime

The committee may waive administrative penalties if the following conditions are met:

  1. Death of the registered natural person or the owner of a sole establishment,
  2. Death, illness, or resignation of a key employee of a registered establishment,
  3. Restrictions, or precautionary or preventive procedures imposed by government authorities in the State
  4. A general malfunction in the Authority’s systems, payment gateways or used telecommunication services
  5. Execution of a custodial sentence on the registered person or the owner of a sole establishment
  6. The person carries out the tax obligations and settles all due tax amounts in accordance with the Tax Law through an account of another person registered for tax purposes with the Authority
  7. If the Person has been declared insolvent or bankrupt, and due taxes before the declaration of bankruptcy or insolvency were settled

Procedures for Submitting Requests for Paying by Instalment and Waiver

Requests for Settlement of Administrative Penalties by instalments or Waiver of Administrative Penalties shall be submitted to the Authority in the forms prepared by the Authority and should contain the following information

  1. Name and information related to the Person, including email and correspondence address
  2. Tax registration number (TRN), if applicable
  3. The amount of Administrative Penalties and violations relating to the Request
  4. Date of imposition of the Administrative Penalties subject of the Request
  5. Reasons for submitting the Request
  6. Attaching an undertaking by the Person to settle the required payment in accordance with the Administrative Penalties instalment plan approved by the Committee, in case the request relates to the Settlement of Administrative Penalties by instalments
  7. Attaching an undertaking by the Person that the person has corrected the violation and undertakes not to repeat the violation, in case the request relates to the Waiver of Administrative Penalties
  8. The Person shall not make more than one request for Settlement of Administrative Penalties by instalments or Waiver of Administrative Penalties in respect to same Administrative Penalties under review

Review of requests

  1. The Authority’s Director-General shall present to the Committee the requests that are received and that meet the procedures prescribed in Article 5 of this Decision, within a period not exceeding 40 business days from the date of receipt of the request.
  2. The Committee shall decide on the requests submitted to it within 60 business days from the submission of the matter to the Committee, otherwise, non-response shall be deemed a rejection of the request.
  3. The decision of the Committee shall be deemed final
UAE: New rules on administrative penalties waivers and installments

The implementation of committee’s decisions

  1. The Authority shall notify the Person, through the address or email shown in his request, of the Committee’s decision within 10 business days from the date of issuance of the Committee’s decision
  2. The Authority shall notify the Person, through the address or email shown in his request, of the Committee’s decision within 10 business days from the date of issuance of the Committee’s decision.
  3. The Person Entitled to Pay by Instalments shall commit to pay the instalments in accordance with the instalment decision specified by the Committee
  4. The Authority shall follow up on the execution of the decisions of the Committee and ensure the Person’s commitment to pay the instalments due on time. The Authority shall report cases of non-payment to the Committee to take a decision on the matter

The Committee may revoke the decision to pay by instalments in case of non-payment and may take the following actions:

1. Specify a new plan for the Person, if the Person submitted the reasons of non-payment, and such reasons were accepted by the Committee.

2. To direct the Authority to take the necessary legal actions to collect the Administrative Penalties.

The refund of administrative penalties

  1. The Committee shall specify the cases and rules for the refund of penalties collected during the 5 five years preceding the date of reviewing the refund of the penalties, in order to achieve tax justice and equality between the legal positions of Taxable Persons.
  2. The Committee shall specify the cases and rules for the refund of penalties collected during the 5 five years preceding the date of reviewing the refund of the penalties, in order to achieve tax justice and equality between the legal positions of Taxable Persons

Summing up

The taxable persons can now apply to waive administrative penalties or installment of penalties. Nevertheless, we strongly recommend carefully considering the conditions laid down in the new cabinet decree No. 105 of 2021 – Controls and Procedures for Paying Administrative Penalties by Instalments, and Waiving and Refunding Administrative Penalties

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