FTA Announces Penalty-free Period for Tax Record Updates

UAE FTA’s Grace Period

Update Your Tax Records Without Penalties

Businesses are required notify the FTA within 20 business days of any event that may require an update or amendment to the tax records held by the FTA. Accordingly, failure to inform FTA within aforesaid timeline attracts administrative penalties.

The UAE’s Federal Tax Authority (FTA) has recently issued a public clarification allowing businesses to update their tax records without imposing administrative penalties during the grace period. This grace period, from January 1, 2024, to March 31, 2025, gives businesses the chance to correct information like their name, address, trade license details, and other tax-related records.

Additionally, the instances addressed in the Public Clarification also include:

• Failure to notify the FTA about the opening of a new branch and its associated trade license.
• Failure to inform the FTA of a change in business address.
• Failure to update records prior to attempting registration for Corporate Tax.
• Registration for Corporate Tax with incorrect details, and failure to correct the information subsequently.

Why This grace period matters

This grace period is an opportunity for businesses to avoid penalties that could arise if their tax records have not been updated with FTA within prescribed timelines. The FTA is encouraging businesses to update their records with FTA, helping them stay compliant and avoid unnecessary costs.

If a business is fined for failing to update its tax records with the Federal Tax Authority (FTA) between January 1, 2024, until the implementation date of the grace period, that penalty will be reversed. In case, the business has already paid the penalty, the amount will be credited back to their tax account. Businesses do not need to contact the FTA to request the reversal; it will be done automatically.

What businesses should do

• Check your information: Ensure that all your details with the FTA—like your company name, address, trade license information, and other key records—are correct and up-to-date.
• Take action during the grace period: This grace period is a one-time opportunity to update records without penalties. It’s important to make changes before it ends on March 31, 2025.
• Seek professional guidance, if needed: If you’re unsure about any details or have faced penalties before, consider reaching out to our tax agents for assistance.