22 August, 2023

UAE Announces Penalties for Violations of Corporate Tax Rules

penalties for violations of corporate tax rules

The UAE government has now taken stringent steps to ensure the complete enforcements of its latest changes in the new corporate tax laws. The Ministry of Finance has issued Cabinet Decision No. (75) of 2023, which defines a detailed list of corporate tax infractions and the administrative penalties that will be levied on non-compliant taxable people or businesses. From August 1 the decision will become concrete and go into immediate effect. This marks an important step forward to the country’s quest of tax compliance and long-term economic prosperity.

Penalties for Non-Compliance

From August, one can expect the new cabinet to strictly adhere to the new UAE Corporate Tax laws. These will be the penalties imposed upon the defaulters:

  •  Exceeding the Time limit for the payment of Corporate Tax: The Businesses who would lapse on their Corporate Tax payment on time will receive heavy fines.
  • Failure to notify the Federal Tax Authority of changes to tax records: In order to ensure accuracy and transparency, registered organisations must notify the Federal Tax Authority of any changes to their tax records in a timely manner.
  • Failure to retain and submit required documents: Businesses are required by law to keep accurate tax records and submit all relevant information.

Voluntary Disclosure Penalties

A new mechanism for voluntary disclosure penalties has been implemented alongside the specific infractions. This law has come into effect to ensure that all businesses will come forward on their own if any mistakes or omissions have occurred in their tax filings. The UAE hopes to establish an environment of confidence and collaboration between taxpayers and tax officials by offering a channel for voluntary disclosure.

Enhancing Corporate Tax Compliance

These fines demonstrate the UAE government’s commitment to ensuring corporate tax compliance and keeping with worldwide tax norms. According to Younis Haji Al Khoori, undersecretary of the Ministry of Finance, corporate tax compliance is a common obligation of all taxable people. It not only assures the proper implementation of the corporate tax system, but it also supports UAE’s economic growth.

A Balanced Approach

The Ministry of Finance has taken effort to provide a balanced approach to the Corporate Tax Law Penalties. The fines have been benchmarked to verify their efficacy while not unduly burdening UAE firms. The government seeks to find a balance between promoting compliance and fostering the expansion of the private sector, which is critical to the country’s economic progress.

Accessing the Corporate Tax Law Information

All Cabinet and Ministerial Decisions are available on the official website of the UAE Ministry of Finance for businesses and people seeking extensive information on the Corporate Tax Law and related regulations:”https://mof.gov.ae/tax-legislation/“.

The UAE’s announcement of fines for infractions of corporate tax regulations is a significant step forward in the country’s efforts to promote a culture of tax compliance and openness. The latest Cabinet decision reaffirms the government’s commitment to timely and correct tax filings while promoting long-term economic growth. By enacting these measures, the UAE hopes to establish a favourable legal climate that encourages tax compliance and accords with global norms, therefore strengthening its position as a responsible and active player in the international economic sphere.