UAE: Tax-related penalty regime revised

The measures are expected to be effective beginning from 27 June 2021.

The measures are expected to be effective beginning from 27 June 2021.

Cabinet Resolution No. (49) of 2021 revises administrative penalties imposed for violations of tax laws in the United Arab Emirates.

Among the changes to the penalty regime are the following:

  • The late-payment penalty has been revised to be imposed at a rate of 4% monthly (instead of 1% daily) with a cap of 300%.
  • Concerning voluntary disclosures, the payment deadline has been re-set to 20 business days from receipt of the voluntary disclosure submission date (instead of the payment deadline of the underlying tax return for which the underpayment arose).
  • The amounts of “fixed penalties” in respect to late registration, deregistration or failure to issue tax invoices or tax credit notes are reduced.

The measures are expected to be effective beginning from 27 June 2021 (60 days from the date of publication).

There is a mechanism for obtaining relief from penalties imposed under the current system, with the amount of penalties to be reduced to 30% of the amount previously imposed as long as certain conditions are met by 31 December 2021. The procedure for claiming this relief has not yet been announced.

Read a May 2021 report prepared by the KPMG member firm in the United Arab Emirates

 

 

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