The FTA provided an overview of the penalty relief introduced by Cabinet Decision No. 49 of 2021 which amends administrative penalties

First virtual workshop of 2021 attended by 268 Tax Agents

Abu Dhabi, 14 June 2021: The Federal Tax Authority (FTA) confirmed during its first tax agent virtual session of 2021 that 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, provides relief as a measure to support businesses, and allows the re-determination of unpaid due administrative penalties which were imposed on taxable persons before 28 June 2021 – the effective date of the new decision.

The FTA organized its first tax agent virtual session of 2021 as part of its plan for ongoing communication with its strategic partners, and to introduce the latest developments regarding the tax legislative environment. The session was attended by 268 authorized tax agents and FTA representatives and officials. A detailed presentation on the implementation of the new decision and its relief for tax registrants was showcased – in addition to the conditions required to benefit from the re-determination of administrative penalties imposed on tax registrants. Cabinet Decision No. 49 of 2021 states three conditions that must all be met in order for tax registrants to benefit from the re-determination of unpaid administrative penalties to be 30% of the value due on 28th June 2021. The first condition is that the administrative penalty must be imposed under Cabinet Decision No. 40 of 2017 on the Administrative Penalties for Violating Tax Laws in the UAE before 28 June 2021, which is the effective date of the new decision, and remain outstanding on such date.

The second condition is that the tax registrant settles all payable tax by 31 December 2021; and the third condition requires tax registrants to pay 30% of administrative penalties payable and unsettled by 28 June 2021, on or before 31 December 2021. During the session, it was indicated that, should the registrant meet all these conditions, the FTA will, after 31 December 2021, re-determine the unsettled payable administrative penalties due on 28 June 2021 to be equal to 30% of such unsettled penalties. This will therefore absolve the tax registrant from paying the remaining 70% and the relief will be applied automatically when the registrant fulfills the specified conditions.

FTA representatives also provided an overview of the violations and administrative penalties, 16 of which have been amended either in value or in the calculation method stipulated in the aforementioned Cabinet Decision.  The amendments affected administrative penalties applied on violations in relation to the Federal Law No 7 of 2017 on Tax Procedures, the Federal Decree-Law No 7 of 2017 on Excise Tax and Federal Decree-Law No 8 of 2017 on Value Added Tax (VAT).

During the session, FTA representatives answered various queries raised by tax agents about the amendments of administrative penalties imposed for violating tax laws and presented practical examples of their applications.

As part of its ongoing awareness-raising efforts, the FTA has issued two new public clarifications on the amendments of administrative penalties and on the redetermination of administrative penalties imposed prior to 28 June 2021, within the framework of the public clarification service provided on the FTA’s website (https://www.tax.gov.ae/en). Public clarifications aim to familiarize persons with tax aspects which need simplified explanations, enabling them to apply the tax principles accurately and efficiently.

About The Federal Tax Authority

The Federal Tax Authority was established by Federal Decree-Law No. (13) of 2016 to help diversify the national economy and increase non-oil revenues in the UAE through the management and collection of federal taxes based on international best practices and standards, as well as to provide all means of support to enable taxpayers to comply with the tax laws and procedures.

Since its inception in 2017, the FTA has been committed to cooperating with the competent authorities to establish a comprehensive and balanced system to make the UAE one of the first countries in the world to implement a fully electronic tax system that encourages voluntary compliance, with simple procedures based on the highest standards of transparency and accuracy – beginning from registration, to the submission of tax returns, to the payment of due taxes through the Authority’s website: www.tax.gov.ae.

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