On November 6, 2024, the Federal Tax Authority (FTA) issued a new Decision to assist registered businesses in surviving challenges regarding compliance with the tax requirements. The decision allows registered persons who have neglected past record updating deadlines to do so without any penalties from the 1st of January, 2024, up to the 31st of March, 2025.
Grace Period: Opportunity to Avoid Penalties
This grace period provides businesses with the chances they have been looking for to rectify their tax records and report any changes that are overdue. During this period, all registrants can effect modifications on their records without being charged any fines. In addition, fines paid during this period under Cabinet Decision No. (105) of 2021, that determines procedures of payment and waiver of penalties and the refunds.
Mandatory Notification of Changes for Registered Taxpayers
The FTA points out the necessity of maintaining up-to-date documents and information. Any change or modification of information should be communicated to the FTA authority by the taxpayer within 20 working days from the said change. Updates in progress should include:
- Name and legal address management;
- E-mail contact;
- Commercial license in detail;
- Organisational or legal forms;
- Joint ventures partnership agreements;
- Business Articles of the Association;
- Changes in interest and form of activity of the company.
Assistance to Businesses for Tax Compliance
The Federal Tax Authority drew attention to the relevance of this approach by indicating that businesses can manage their tax responsibilities in this manner. FTA stressed the thrust of the Authorities to engage and work around registered taxpayers with a view of enhancing compliance which leads to economic development.
Compliance with National Economic Objectives
The Federal Tax Authority has also pointed out that this decision is in line with UAE leadership's vision of having a strong and transparent taxation system as a tool for driving economic development. The grace period presents an incentive for self-enforcement and exhibits some degree of lul in the context of changing business dynamics.
Timely Action: A Call to Action
The Federal Tax Authority therefore called all the registered taxpayers to appeal to this grace period to mitigate their tax liabilities. The Authority emphasized that this initiative furthers the UAE’s economic competitiveness and helps create conducive conditions for business growth.
Guidance - How to Do It – Resources Provided
The FTA has issued a set of guidelines which can be found in the Public Clarifications section on the official website of the Authority. This information assists businesses in complying with and executing their tax obligations in the grace period.
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Frequently Asked Questions
What is the purpose of the grace period announced by the FTA?
The grace period, from January 1, 2024, to March 31, 2025, allows tax registrants who have fallen behind on updating their records to make necessary updates without incurring administrative penalties. This measure aims to encourage compliance while reducing the immediate burden on businesses.
Who qualifies for the grace period?
The grace period applies to all tax registrants who have not updated their records as required by UAE tax laws. If penalties have already been paid for late updates during this period, registrants may qualify for a refund.
How can I request a refund for penalties paid before the grace period?
To request a refund for previously paid penalties, registrants can follow the Penalty Refund Procedures in Cabinet Decision No. (105) of 2021, which covers the processes for paying, waiving, and refunding administrative penalties.
Who Is Required for Compulsory Registration with the Federal Tax Authority (FTA)?
All corporate businesses and individuals fulfilling the tax registration criteria under UAE law are obliged to register with the FTA. This includes companies offering services and goods, exporters, importers, and those, entities who are operating in the tax jurisdiction of the UAE
What tax record changes must be communicated to the Federal Tax Authority office?
Individuals or business entities who register with the tax system are obliged to update any information regarding the business on any other business-related activities that were conducted by the FTA including but not limited to business name, business address, legal structure, activities stated in the trade license, business partnership agreements among other changes. Any such change should also be communicated to the Authority or the local tax office in UAE within a timeframe of not more than twenty working days.
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