The Ministry has issued the latest Cabinet Resolution No. 40 of 2017 on Administrative Penalties for Violations of Tax Law in the UAE which mentions that the Federal Tax Authority (FTA) has the permission to issue Administrative Penalties to any registered taxpayer for non-compliance of the law.
Basically, any company that provides goods or services and makes a late tax payment to the FTA because of its customer’s late or unpaid invoices, incurs administrative penalties pursuant to the above Resolution.
We suggest that Companies should execute Tax Indemnification Agreements with all their customers which shall cover the Company against any penalties from the Authorities so as not to be burdened by Administrative Penalties for Late Tax Payments due to Late Payments from your customers.
How MBC can Assist
We can assist to prepare a Tax Indemnification Agreement which will protect your company from the above penalties as the company can reclaim the penalty amount from the customers who caused the late tax payment.
We shall be able to advise on the best practice for your Company which may be to either incorporate the relevant indemnification in the standard contract the customers or as a stand-alone agreement.
Our legal team has vast experience in drafting air-tight Tax Indemnification Agreements to protect your Company from the above penalties to claim recourse from the customers.
Request a call back and our team will assist you in the matter