ABU DHABI, 14th June, 2021 - The Federal Tax Authority (FTA) has confirmed during its first tax agent virtual session of 2021 that Cabinet Decision No. 49 of 2021 on amending some provisions of Cabinet Decision No 40 of 2017 on the Administrative Penalties for Violation of Tax Laws in the UAE, provides relief as a measure to support businesses, and allows the re-determination of unpaid due administrative penalties which were imposed on taxable persons before 28th June, 2021, the effective date of the new decision. The FTA organised the first session of 2021 as part of its ongoing communication with its strategic partners, and to introduce the latest developments regarding the tax legislative environment. The session was attended by 268 authorised tax agents and FTA representatives and officials. A detailed presentation on the implementation of the new decision and its relief for tax registrants was showcased, in addition to the conditions required to benefit from the re-determination of administrative penalties imposed on tax registrants. Cabinet Decision No. 49 of 2021 states three conditions that must all be met for tax registrants to benefit from the re-determination of unpaid administrative penalties to be 30 percent of the value due on 28th June 2021. The first condition is that the administrative penalty must be imposed under Cabinet Decision No. 40 of 2017 on the Administrative Penalties for Violating Tax Laws in the UAE before 28th June, 2021, which is the effective date of the new decision, and remain outstanding on such date.
The second is that the tax registrant settles all payable tax by 31st December, 2021, and the third condition requires tax registrants to pay 30 percent of administrative penalties payable and unsettled by 28th June, 2021, on or before 31st December 2021. During the session, it was indicated that, should the registrant meet all these conditions, the FTA will, after 31st December, 2021, re-determine the unsettled payable administrative penalties due on 28th June, 2021, to be equal to 30 percent of such unsettled penalties. This will absolve the tax registrant from paying the remaining 70 percent and the relief will be applied automatically when the registrant fulfils the specified conditions. FTA representatives also provided an overview of the violations and administrative penalties, 16 of which have been amended either in value or in the calculation method stipulated in the aforementioned Cabinet Decision. The amendments have affected administrative penalties applied on violations in relation to the Federal Law No 7 of 2017 on Tax Procedures, the Federal Decree-Law No 7 of 2017 on Excise Tax and Federal Decree-Law No 8 of 2017 on Value Added Tax (VAT). During the session, FTA representatives answered various queries raised by tax agents about the amendments of administrative penalties imposed for violating tax laws and presented practical examples of their applications. As part of its ongoing awareness-raising efforts, the FTA has issued two new public clarifications on the amendments of administrative penalties and on the redetermination of administrative penalties imposed before 28th June, 2021, within the public clarification service provided on the FTA’s website (https://www.tax.gov.ae/en).