UAE- June 10, 2021:

The Federal Tax Authority (FTA) has revised the tax penalties by issuing Decision No. 49/2021 (New Resolution), amending provisions of Cabinet Decision No. 40/2017 (Old Decision) imposed for the violation of Tax Laws in the UAE. Prior to the issuance of the New Decision, taxpayers were faced with heavy penalties for non-compliance under the regulations. Although the penalties imposed under the previous Cabinet Resolution were to reduce non-compliance and to be more compliant with the law, these always posed a heavy burden on taxpayers.

As per Cabinet Decision No. 49/2021 amendments of penalties for violation of tax laws aims to support registrants in fulfilling their tax obligations.

Kindly note the following:

• The Decision will go into effect starting from 28 June 2021.
• The Decision reduces many administrative penalties imposed on the violation of tax laws post 28 June 2021.
• The Decision allows registrants who have been penalized prior to the effective date of the Decision to benefit from a penalty redetermination scheme, where they would only be required to settle 30% of their payable administrative penalties outstanding on 28 June 2021 subject to meeting the requirements specified in the Decision.

In order to benefit from the penalty redetermination scheme, the FTA urges registrants to settle all pending tax until 31 December 2021 and 30% of the total administrative penalties imposed and outstanding on 28 June 2021, no later than 31 December 2021.

For more details, please click the links below.

• Cabinet Decision No. 49 of 2021
• Public Clarification TAXP001 – Amendment to the Penalties Regime
• Public Clarification TAXP002 – Redetermination of Penalties