Tax Update: Administrative Penalties for Violations related to Corporate Tax in the UAE from August 2023
With the introduction of the UAE Corporate Taxation regime, the government authorities have been very active in the last weeks by publishing numerous Cabinet, Ministerial, and Federal Tax Authority Decisions. The Ministry of Finance recently published a Cabinet Decision to the Decree Law No. 47 of 2022 on Taxation of Corporations and Businesses Law (“CT Law”) regarding administrative penalties. The avoidance of administrative fines will be a strong incentive for taxable persons to pay their taxes on time and deter tax evasion.
Under the Decision, administrative penalties will be imposed for several CT Law related violations. Those violations, inter alia, include failure to register, failure to maintain adequate records, submission of incorrect tax returns and settling the payable tax, failure to offer facilitation to the tax auditor, and failure to inform the FTA about changes in taxpayers’ records. Substantial penalties may be imposed even for minor infringements.
To avoid penalties, we advise companies to assess their operation and prepare themselves for the adoption of the UAE CT before the start of their first financial year.
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