The UAE Ministry of Finance recently issued Cabinet Decision No. (75) of 2023 outlining administrative penalties for corporations and businesses related to non-compliance with Corporate Tax Law (Federal Decree-Law No. (47) of 2022). These new regulations underscore the UAE’s ongoing efforts to establish a comprehensive tax system, ensuring transparency, fostering economic growth, and harmonizing the business environment.
To help businesses understand these changes better, we delve into the new law’s specifics, focusing primarily on the announced penalties for non-compliance. We summarize this information in a handy tabular format for your convenience.
Here are the penalties and their brief explanations:
|Violation||Penalty (AED)||Brief Explanation|
|1. Failure to maintain records||10,000 for each violation or 20,000 for repeated violation within 24 months||If a business doesn’t keep the required records and information, it can face a penalty, which can double for repeat offenses.|
|2. Not submitting documents in Arabic||5,000||If a business doesn’t submit documents related to tax in Arabic when asked, it will be penalized.|
|3. Late deregistration||1,000 per month up to a maximum of 10,000||If a business fails to submit a deregistration application on time, it will be fined each month until it complies, with penalties capped at 10,000.|
|4. Failure to inform about amendments||1,000 for each violation or 5,000 for repeated violation within 24 months||A business must inform the Authority of changes to its tax record. Penalties can multiply for repeated offenses.|
|5. Failure of Legal Representative to notify their appointment||1,000||The penalty will be charged from the Legal Representative’s own funds if they fail to notify their appointment.|
|6. Failure of Legal Representative to file a Tax Return||500 per month for the first 12 months, 1,000 per month from the 13th month||This penalty is also due from the Legal Representative’s own funds and increases after 12 months.|
|7. Failure to submit a Tax Return||500 per month for the first 12 months, 1,000 per month from the 13th month||The penalty increases after 12 months of non-compliance.|
|8. Failure to settle the Payable Tax||14% per annum on the unsettled amount||This penalty is imposed monthly and calculated on the unsettled payable tax amount.|
|9. Submitting an incorrect Tax Return||500||This penalty applies unless the incorrect Tax Return is corrected before the submission deadline.|
|10. Late Voluntary Disclosure related to errors||1% monthly on the Tax Difference||The penalty applies from the due date of the relevant Tax Return until the Voluntary Disclosure submission.|
|11. Failure to submit Voluntary Disclosure before a Tax Audit||15% fixed penalty on the Tax Difference and 1% monthly on the Tax Difference||The fixed penalty applies immediately, while the monthly penalty applies either after notification of a Tax Audit or after the due date of the relevant Tax Return.|
|12. Failure to assist the Tax Auditor||20,000||The penalty will be due from the Person’s, Legal Representative’s, or Tax Agent’s own funds if they fail to assist the Tax Auditor.|
|13. Failure to submit or late submission of a Declaration||500 per month for the first 12 months, 1,000 per month from the 13th month||The penalty increases after 12 months of non-compliance.|
In a nutshell, Cabinet Decision No. (75) of 2023 demands businesses to be meticulous about their tax-related duties and encourages compliance with the Corporate Tax Law. These measures fortify the UAE’s economic infrastructure and pave the way for a transparent and robust business environment.
As always, we recommend consulting with a legal or tax professional for comprehensive advice tailored to your circumstances. Understanding and complying with these laws can save businesses from unnecessary penalties, while fostering growth and stability in the UAE’s dynamic business landscape.