The new FTA Whistle-Blower Program

The new FTA Whistle-Blower Program – Now get a monetary reward for Reporting Tax Non-Compliance or Tax Evasion

Tax evasion is one of the biggest challenges for tax systems around the world. It requires strong combined efforts between governments and societies to curb this illicit malpractice that is so detrimental to the economy.

On 14 April 2022, the Federal Tax Authority (FTA) launched a ‘’whistle-blower’’ program for tax violations and evasion. It aims to promote community awareness of tax compliance and the reporting of tax irregularities. It also seeks  to reinforce both a sense of justice and fairness among the tax compliant and the fact that non-compliance and evasion shall not go undetected.

What is whistle-blowing?

Whistleblowing is a new mechanism introduced by the UAE’s Cabinet of Ministers, mandating the FTA to receive and process leads relating to the non-compliance of natural or legal persons with the tax legislation, as well as to offer a monetary reward to informants when certain conditions are met.

The information received from natural persons may relate to natural or legal persons’ suspected tax evasion activities or non-compliance with tax laws and procedures.

The FTA clarified that the identity of the informant shall remain confidential and protected by the FTA. It shall be disclosed neither to unauthorized personnel, or the natural or legal person being reported, nor in legal proceedings against the reported person. At the time of submitting a lead, the informant shall be required to sign a non-disclosure agreement (NDA) to protect confidential or sensitive information, including information on monetary rewards, if any.

Monetary Rewards

As per the guidelines of this new initiative, the FTA will pay monetary rewards to the informant and the reward money will be proportionate to the amount of tax collected by the FTA as a result of the information submitted. The reward money will be credited to the informant’s bank account after the matter has been investigated and relevant tax is collected from the reported person.

Following are the conditions to be met for getting the monetary reward. All these conditions must be satisfied to qualify for the FTA’s monetary reward.

• The provided information is credible, accurate, and has not been obtained previously by the FTA
• The whistleblowing form is filled out accurately, completely, and sufficiently
• The FTA has collected tax amounts that exceed AED50,000
• The reported person has exhausted all forms of objections and appeals.

MBG’s remarks

It has been over four years since VAT was implemented in the UAE. VAT has become an integral part of businesses in the UAE. The FTA has continuously taken proactive steps towards tax compliance by introducing new initiatives and measures. Tax compliance could well be the new priority on the Executive agenda in 2022.

This will require companies to keep detailed and precise accounting records and documents including sales invoices, purchase invoices, credit notes, Customs declarations, etc. that conform to regulatory standards while submitting timely reports to tax authorities. After this whistleblower program, the FTA will perform random tax audits to verify the fulfillment of VAT requirements and compliance with tax legislation based on the information shared by whistleblowers.

The announcement of the whistleblower program by the  FTA forces companies to establish and seriously reconsider the tax compliance framework with its challenges of reporting complexities and inaccuracies, records management and audits with substantial penalties for non-compliance.

It is fair to say that VAT compliance review is a necessity rather than an option. It reinforces your organization’s readiness to face a VAT audit. To avoid VAT non-compliance with all the consequences that entails, it is highly advisable that your organization engage a reputed third party consultant like MBG to conduct VAT compliance reviews.

MBG’s VAT compliance review/ VAT health check helps you understand the causes of non-compliance and address them for the future. It helps you identify the areas that need to be rectified while providing assurance on the accuracy of taxes actually remitted. We aim to support companies in meeting tax compliance obligations, optimize costs, mitigate risks, and avoid unnecessary penalties.