TAX Procedure Update: FTA Announces Grace Period To Update Information in Tax Records
The Federal Tax Authority (FTA) issued Public Clarification TAXP007 (Clarification) announcing the special dispensation for updating records with the FTA.
The FTA has implemented a grace period from 1 January 2024 to 31 March 2025 (grace period), allowing the registrants to rectify their tax records without incurring administrative penalties.
Background
- Under UAE Tax Laws, Registrants must inform the FTA within 20 business days of any event requiring an update or amendment to their tax records. Such events could include changes in the following areas:
- Change in business details – name, address, or email of the entity
- Legal form of business
- Licensed activities of the entity
- Updating expired documents – trade license, passport/EID of individual shareholders, etc
- Failure to amend the tax records with the FTA is subject to administrative penalties as follows:
- VAT Registration Application: AED 5,000 for each violation and AED 10,000 in case of repeated violation within 24 months
- CT Registration Application: AED 1,000 for each violation and AED 5,000 in case of repeated violation within 24 months
Practical ambiguities encountered while amending the details:
- Change of legal status of the entity can be done in the case of:
- Business change – e.g., change from a Sole establishment to an LLC
- Incorrect selection of legal status while applying for VAT/CT registration
- Any other reason
Per the EmaraTax portal guidelines, the amendment can only be made once. There is no clear guidance or indication on the portal regarding whether another amendment can be made later if needed.
- License issue date for Dubai International Financial Centre (DIFC) entities
- DIFC licenses do not explicitly mention the initial license issue date. Instead, the license typically references the renewal date as the official issue date
- When reviewing amendment applications of DIFC entities, the FTA seems to automatically update or change the initial issue date to the renewal issue date
The FTA has an inconsistent approach when reviewing amendment applications of entities from different jurisdictions.
Implications of the Clarification
- No administrative penalties will be imposed on registrants for delays in updating their tax records during the grace period
- Administrative penalties already imposed or paid shall be reversed or added back by the FTA to the Registrants tax account.
Next Steps
- Registrants are encouraged to take advantage of this opportunity to update the records with the FTA before the grace period ending 31 March 2025
How can we help?
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Re/think is an award-winning regional multi-service business advisory and outsourced services firm providing accounting, regulatory and compliance, tax and VAT advisory, audit, HR consultancy and recruitment services to regulated firms, multi- and single-family offices, and other operating businesses.
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