According to the FTA, only a few days are left to benefit from the redetermination on December 31, 2021, in accordance with Cabinet Decision No. 49 of 2021on the Administrative Penalties for Violation of Tax Laws in the UAE, which came into effect on June 28, 2021.
Three conditions to redetermine administrative penalties levied before June 28, 2021
The Cabinet Decision No. 49 of 2021 outlined three conditions that need to be met in order to benefit from the redetermination of administrative penalties imposed before June 28, 2021.
- The administrative penalty must have been imposed under Cabinet Decision No. 40 of 2017 before June 28, 2021, and that the administrative penalty due was not settled in full before June 28, 2021.
- The tax registrant should settle all payable taxes by December 31, 2021.
- The tax registrant should settle 30 percent of the total unsettled administrative penalties due until June 28, 2021, no later than December 31, 2021.
The FTA said that should the registrant meet these conditions, the administrative penalties will be redetermined to equal 30 percent of the total unpaid penalties, and that will appear on the eServices account of the registrant after December 31, 2021.
“Cabinet Decision No. 49 of 2021 aims to support tax registrants to fulfil their tax obligations, boosting the UAE’s competitiveness in doing business,” said Khalid Ali Al Bustani, Director-General of the FTA.
The FTA clarified that when completing the process for redetermination of administrative penalties, registrants can use the “Payment Adjustment Type” feature. The feature allows registrants to allocate the amounts based on their payment preferences. The options available are either to pay tax first, or pay administrative penalties first, or pay the oldest liability. To benefit from the redetermination of penalties, registrants should choose their preferred option in order to achieve the intended payment allocation results.
The FTA highlighted the importance of ensuring that the tax returns or the voluntary disclosure are submitted before making the payment. If the registrant made the payment before filing the tax return or submitting the voluntary disclosure and had outstanding administrative penalties in their account, the system will settle the payable administrative penalties, since there is no outstanding payable tax in the registrant’s account at the time of making the payment.
The FTA also said that it is essential for tax registrants to pay their payable tax before the due date to avoid any late payment penalties. The FTA further clarified that bank transfers can take two or three working days to process the payment. Hence, the period must be taken into consideration to ensure that the FTA receives the payment before the due date.