The introduction of corporate tax in the UAE will ensure a transparent
taxation process of corporate
income tax UAE by meeting up with global standards. Not filing corporate
tax returns will surely attract penalties for the business as per the current
corporate tax regime. The proposed UAE corporate tax regime only talks about
penalties and fines in general. However, there is not any specific detail or
calculated figures to identify. These details would be included in the final
legislation in 2023. Thus, we will talk about general aspects regarding
violation of tax laws and resulting penalties as per Resolution Number 49,
Penalties for Failing to Provide Accounting Records
Since the introduction of VAT taxation in the UAE, it has
been necessary for enterprises to preserve accurate books of account and other
documents for at least five consecutive years. If a company does not retain and
prevail with the necessary tax documents and relevant data; it will be required
to reimburse a fine of 10,000 dirhams for the initial violation and 20,000
dirhams for each subsequent breach of the regulations, as mentioned in Resolution
no. 49 of 2021 for violation of tax laws in UAE..
When requested by the administration, a taxpayer must
present accurate data of tax, documents, and records in Arabic or face a
sanction of 20,000 AED.
Fines for Delayed Filing of Income Tax Returns
A VAT-registered person must pay a penalty of 1,000 dirhams
for the 1st violation and 2,000 dirhams for the 2nd offense within twenty-four
months if he fails to submit the tax returns by the deadline.
A taxable individual must pay the following fines if they
don't make restitution with their taxes timely:
- If the Payable Tax is paid within 7 days of the deadline,
two percent (2%) of the unpaid tax is due; 4% of the unpaid tax is payable on
the 1st day of next month or later; and 4% of the required tax cost is prone to
a month-to-month sanction (up to a maximum of 300 percent) if the tax is still
owed more than 1 month after the due date.
Value Added Tax (VAT) Penalties for Not Registering
Twenty thousand dirhams in fines will be imposed on any
UAE-based VAT-eligible corporation that misses the deadline to enroll on the
Federal Tax Authority site.
Failure of registrants to provide deregistration
requisitions by the deadline will be accountable to a fine of one thousand
dirhams and the amount can increase to ten thousand as the months pass by.
Moreover, five thousand dirhams will be charged for the first offense, and
fifteen thousand dirhams for subsequent failures to notify the Authority of a
necessary adjustment to tax documents
What Penalties Will Be Imposed When You Submit False Income Tax Returns?
There will be two penalties in this case;
1. Fixed Sanction
You have to pay a penalty of 1,000 dirhams for the 1st
offense and 3,000 dirhams for subsequent violations if you decline to
voluntarily disclose inaccuracies in the tax returns you have filed.
Furthermore, taxpayers who voluntarily reveal fallacies but give false data
will be subject to a penalty calculated as: the difference between the amount
paid and what had to be paid plus five percent of that difference.
2. Penalty Based on a Percentage
- If the Registrants do not bring about a willing disclosure
or if they commit so after being informed of the tax audit and the Authority
has started up the tax audit operation, or after being requested for data
contemplating the tax audit, whichever ensures early, the sanction is fifty
percent (50%) of the amount revealed.
- If the Registrants choose to come forward after being
informed of the impending tax audit but before the Authority starts it, the
penalty will be 4 percent.
- If the Registrants compel a volitional disclosure before
the Authority notifies them of the tax audit; the penalty will be five percent.
A Legal Representative is Chosen by the Company:
A legal ambassador of a taxable firm must pay a penalty of
10,000 dirhams if they fail to notify the Federal Tax Authority (FTA) about
their appointment promptly. He will be charged 1,000 AED for the 1st violation
and 2,000 AED for a subsequent offense within twenty-four months if he neglects
to catalog a tax return on behalf of his taxable firm within the allotted
Choose the Best corporate tax Services in UAE
It's crucial to prepare yourself before jumping into the
practical ground. You should take into account proficient corporate tax advisory services
like Farahat and co. that help you to avoid any possible penalty while encountering corporate tax in UAE.
Also, corporate tax
advisors are well aware of the latest rules and regulations regarding corporate tax in UAE.
Thus, it's a rational approach to avail that smart solution for the effective
progress of your corporation. So, reach out top-notch consulting firm to learn
more about corporate tax law before the law is imposed with full effect.