Take advantage of penalty redetermination: FTA

The Federal Tax Authority (FTA) has called on tax registrants in the UAE to benefit from the penalty redetermination scheme introduced by Cabinet Decision No. 49 of 2021 on Amending Some Provisions of Cabinet Decision No. 40 of 2017 on the Administrative Penalties for Violation of Tax Laws in the UAE, which will be effective from 28th June 2021.

In a press release issued on Saturday, the FTA stressed the three conditions that must be met in order for tax registrants to benefit from the re-determination of unpaid administrative penalties imposed prior to 28 June 2021, to equal 30 per cent of the total unpaid penalties.

The first condition is that the administrative penalty must have been imposed under Cabinet Decision No. 40 of 2017 before 28th June 2021, and some or all of it remains outstanding.

The second condition is that the tax registrant settles all payable tax by 31st December, 2021, so that there is no outstanding tax payable by the end of 2021. Finally, the third condition requires tax registrants to settle 30 per cent of any administrative penalties payable and unsettled by 28th June, 2021, on or before 31st December 2021.

Khalid Ali Al Bustani, Director-General of the FTA, said: “In order to ensure a smooth, flexible, and accurate implementation of the decision and to provide additional facilities for registrants to benefit from the decision, the Authority will be launching a dashboard for penalty redetermination, which can be accessed from the main dashboard of the registrant on the FTA’s E-Services portal, which enables registrants to check various data, including “Total Unpaid Administrative Penalties imposed before 28 June 2021”; “Total Unpaid Administrative Penalties reversed after 28 June 2021” -an amount that may be related to penalties imposed before 28 June 2021, but the decision to reverse was taken after 28 June 2021; “Net Unpaid Administrative Penalties imposed before 28 June 2021” - The difference between the Total Unpaid Administrative Penalties imposed before 28 June 2021 and Total Unpaid Administrative Penalties reversed after 28 June 2021, which is subject to redetermination if conditions are met; “Total Administrative Penalties payable as per Cabinet Decision No. 49 of 2021” - The 30 per cent share of Total Unpaid Administrative Penalties imposed before 28 June 2021, that needs to be settled before 31 December 2021 in order to benefit from the redetermination; “Total Administrative Penalties paid after 28 June 2021” - The amount of administrative penalties imposed before 28 June 2021 and considered to have been settled after 28 June 2021; “Outstanding Administrative Penalties payables as per Cabinet Decision No. 49 of 2021” - Amount of administrative penalties that is still expected to be settled in order to benefit from the redetermination; “Tax Payable” - Outstanding tax balance (based on tax returns submitted and any adjustments due to voluntary disclosures or tax assessments) and will be updated on a daily basis until 31 December 2021, for registrants to know how much tax is outstanding and is subject to late payment penalties if not settled by payable date, and needs to be settled before 31 December 2021 to benefit from the redetermination; “Net Outstanding to be paid as per Cabinet Decision No. 49 of 2021” - Sum of Outstanding Administrative Penalties payable and tax that have to be settled before 31 December 2021 in order to benefit from the redetermination.

This may increase or decrease until 31 December 2021 if and when your tax payable and outstanding administrative penalties change.

Al Bustani pointed out that as part of its ongoing awareness-raising efforts, the FTA has issued two new public clarifications on the new decision on its website. The first public clarification details the fundamental amendments to the table of administrative violations and penalties related to the application of Federal Law No. 7 of 2017 on Tax Procedures, in order to ensure certainty of the correct application of these amended penalties. The second public clarification details the mechanism used to redetermine some administrative penalties that were imposed before 28th June, 2021.

In a notice sent to all registrants, the Authority confirmed that any unpaid tax dues may result in the registrant incurring administrative penalties of 4 per cent per month starting from 28th June, 2021 (instead of the current 1 per cent administrative penalty per day and called on registrants to ensure that all tax payable is settled before 28th June, 2021 to avoid incurring a 4 per cent administrative penalty on 28th June 2021.

WAM