UAE CIT
November 07, 2024
UAE: Grace Period for Updating Tax Records
Public Clarification from the Federal Tax Authority allowing businesses to update their tax records without incurring penalties
| Image Credits: "Burj Khalifa" by David Jones
Registrants are legally obligated to notify the FTA within 20 business days of any event that may necessitate an update to their tax records.
This includes changes in essential information, such as:
Name, address, and email address.
Trade license activities.
Legal entity type, partnership agreements, or articles of association.
The nature of business activities.
The address from which the registrant conducts business.
Failure to notify the FTA of these changes within the specified timeframe is considered a tax violation and will result in administrative penalties.
GRACE PERIOD FOR UPDATES WITHOUT PENALTIES
A Cabinet Decision has introduced a grace period to facilitate accurate and up-to-date record-keeping. This grace period allows registrants to amend information in their tax records without facing administrative penalties.
Grace Period Dates: January 1, 2024 – March 31, 2025.
During this time, registrants can update their records with the FTA without incurring penalties, even if they missed the initial 20-day reporting window.
AUTOMATIC REVERSAL OF PAST PENALTIES
For any administrative penalties imposed on registrants between January 1, 2024, and the beginning of the grace period due to delays in updating tax records, these penalties will be automatically reversed. This means:
Registrants do not need to contact the FTA for the reversal.
If penalties have already been paid, the amounts will be credited back to the registrants’ tax accounts.
EXAMPLES OF INSTANCES COVERED BY THE GRACE PERIOD
The grace period applies to a variety of situations, including but not limited to:
Failing to notify the FTA within the required timeframe about a new business branch and upload the associated trade license.
Failing to update the FTA about a business address change within the specified period.
Not updating tax records for VAT/Excise Tax registrants before registering for Corporate Tax.
Registering for Corporate Tax with incorrect details and failing to correct them within the prescribed timelines.
LEGISLATIVE REFERENCES
This Public Clarification is issued under Federal Decree-Law No. 28 of 2022 on Tax Procedures and its amendments, as well as Cabinet Decision No. 74 of 2023 on the Executive Regulation of this Decree-Law. Other related Cabinet Decisions are referenced to guide the application of administrative penalties and their reversal.
Taxpayers are advised to refer to official UAE authorities’ communications for the most accurate and up-to-date information on tax-related matters.
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