Corporate Tax
The decision is effective from 1 August 2023.
UAE’s Ministry of Finance announces penalties for corporate tax violations
August 02, 2023
The Ministry of Finance, vide the Cabinet Decision No. (75) of 2023, has prescribed the following administrative penalties for violations related to the application of Federal Decree Law No. (47) of 2022 on the taxation of corporations and businesses.
Penalties will be imposed on tax payer, whether an individual or a legal entity, who do not comply with their obligations under the UAE Corporate Tax Law.
| Sr No | Description of violation | Amount of penalty (in AED) |
| Records keeping | ||
| 1. | Failure to keep required records and other information specified in the Tax Procedures Law and the Corporate Tax Law | i.10,000 for each violation; or ii. 20,000 in each case of repeated violation within 24 months from the date of the last violation |
| 2. | Failure to submit the data, records and documents related to Tax in Arabic to the Federal Tax Authority when requested | 5,000 |
| 3. | Failure to inform the Federal Tax Authority of any case that may require the amendment of the information pertaining to his tax record kept by the Authority. | i. 1,000 for each violation; or ii. 5,000 in each case of repeated violation within 24 months from the date of the last violation |
| Deregistration | ||
| 4. | Failure to submit a deregistration application within the timeframe specified in the Corporate Tax Law and its implementing decisions | 1,000 in case of late submission of the application and on the same date monthly, up to a maximum of 10,000. |
| Legal Representative | ||
| 5. | Failure of the legal representative to provide notification of their appointment within the specified timeframes, in which case the penalties will be due from the legal representative's own funds. | 1,000 |
| 6. | Failure of the legal representative to file a tax return within the specified timeframes, in which case, the penalties will be due from the legal representative's own funds. | i. 500 for each month, or part thereof, for the first twelve months. ii. 1,000 for each month, or part thereof, from the thirteenth month onwards. This penalty shall be imposed from the day following the expiry date of the timeframe within which the tax return must be submitted, and on the same date monthly thereafter. |
| Compliance | ||
| 7. | Failure to submit a tax return within the timeframe specified in the Corporate Tax Law | i. 500 for each month, or part thereof, for the first twelve months. ii. 1,000 for each month, or part thereof, from the thirteenth month onwards. This penalty shall be imposed from the day following the expiry date of the timeframe within which the tax return must be submitted, and on the same date monthly thereafter. |
| 8. | Failure to settle the Payable Tax | i. A monthly penalty of 14% per annum, for each month or part thereof, on the unsettled payable tax amount from the day following the due date of payment and on the same date monthly thereafter. ii. For the purposes of this penalty, the due date of payment in the case of the voluntary disclosure and tax assessment, shall be as follows: a. 20 business days from the date of submission, in the case of a voluntary disclosure. b. 20 business days from the date of receipt, in the case of a tax assessment. |
| 9. | Submission of incorrect tax return | 500, unless the person corrects his tax return before the expiry of the deadline for the submission of the tax return according to the Corporate Tax Law. |
| Voluntary Declaration | ||
| 10. | The submission of a voluntary disclosure by the tax payer in relation to errors in the tax return, tax assessment or tax refund application pursuant to Clauses (1) and (2) of Article (10) of the Tax Procedures Law. | Monthly penalty of 1% on the tax difference, for each month or part thereof, to be applied as of the date following the due date of the relevant tax return, the submission of the tax refund application, or the notification of the tax assessment and until the date the voluntary disclosure is submitted. |
| 11. | Failure of the tax payer to submit a voluntary disclosure in relation to errors in the tax return, tax assessment or tax refund application pursuant to Clauses (1) and (2) of Article (10) of the Tax Procedures Law, before being notified by the Authority that it will be subject to a tax audit. | The following penalties shall apply: i. A fixed penalty of 15% on the tax difference. ii. A monthly penalty of 1% on the tax difference, for each month or part thereof, to be applied as follows: a. Where the tax payer submits a voluntary disclosure after being notified that it will be subject to a tax audit by the Authority, the penalty shall be imposed for the period from the day following the due date of the relevant tax return, or the submission of the tax refund application or notification of the tax assessment and until the date the voluntary disclosure is submitted. b. Where the tax payer fails to submit a voluntary disclosure, the penalty shall be imposed as of the date following the due date of the relevant tax return, or the submission of the tax refund application or notification of the tax assessment and until the date of issuance of the tax assessment. |
| Non-cooperation during Tax Audit | ||
| 12. | Failure of a payer subject to Tax Audit, his Tax Agent or Legal Representative to offer facilitation to the Tax Auditor in violation of the provisions of Article (20) of the Tax Procedures Law, in which case the penalties will be due from the person’s, legal representative’s or tax agent’s own funds, as applicable. | 20,000 |
| Submission of declaration | ||
| 13. | Failure of a payer to submit, or late submission of a declaration to the Authority, as required in accordance with the provisions of the Corporate Tax Law. | i. 500 for each month, or part thereof, for the first twelve months. ii. 1,000 for each month, or part thereof, from the thirteenth month onwards. This penalty shall be imposed from the day following the expiry date of the timeframe within which the declaration must be submitted, and on the same date monthly thereafter |
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