UAE Announces New Penalties For Corporate Tax Violations

The United Arab Emirates (UAE) Ministry of Finance (MoF) announced new administrative penalties for corporate tax violations. The Cabinet's decision will be effective from Tuesday onwards.

Younis Haji Al Khoori, who serves as Under-Secretary of the Ministry of Finance, explained over the weekend that "adhering to Corporate Tax compliance is a responsibility of all taxable persons to support the implementation of the Corporate Tax system in the UAE, which is in line with the highest global standards," WAM reported.

This carefully designed cabinet decision will ensure that implementation and compliance of the Corporate Tax Law is successful without creating a burden on UAE businesses that comply with the new regulations.

The Under-Secretary of the Ministry of Finance went on to explain that this decision will help to drive "sustainable economic growth in the UAE by providing a conducive legislative environment that promotes tax compliance."

Under Cabinet Decision No. (75) of 2023, Taxable Persons, whether individuals or legal entities, will pay a penalty if they do not comply with obligations under the UAE Corporate Tax Law.

Penalties will be imposed if there is a failure in filing and pay corporate tax on time including "the failure of the Registrant to inform the Federal Tax Authority (FTA) of any case that may require the amendment of the information pertaining to his Tax record kept by the FTA."

As per the new decision, if a person or business fails to comply with the tax procedures, then each penalty amount will be 10,000 AED. If the same mistake is repeated within 24 months from the last violation, then the fine will be doubled to 20,000 AED.

If the records and related documents are not provided in Arabic when requested, then the fine imposed will be 5,000 AED. Whereas, if the legal representative fails to file a tax return within a specific timeframe, then the legal representative will be fined 500 AED each month for the first 12 months.

Following the announcement on Saturday, the FTA disclosed on Sunday that online requests for clarifications related to Corporate Tax registration via its EmaraTax digital tax services platform will start from Tuesday onwards.

EmaraTax is an online platform, where individuals and businesses can easily file tax returns, pay taxes and also get refunds. To ensure a seamless experience for the users, the EmaraTax has been integrated with the UAE Central Bank and UAE PASS, which is used for accessing government services with a national digital identity.

Previously, the UAE's Ministry of Human Resources and Emiratisation (MoHRE) imposed penalties on 436 out of 441 private companies that violated Emiratization decisions from the second half of 2022 to date.