Cabinet Decision No. 75 of 2023 and Amendments: Administrative Penalties for Corporate Tax Violations (Effective from 1 August 2023, Updated 1 March 2024)
Date of Issue: 10 July 2023 (Amended on 22 February 2024)
Effective Date: 1 August 2023 (Amendments effective from 1 March 2024)
The UAE Cabinet has issued Cabinet Decision No. 75 of 2023, as amended by Cabinet Decision No. 10 of 2024, setting out administrative penalties for violations related to Corporate Tax compliance under Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. These penalties are enforceable for violations of both the Corporate Tax Law and the Tax Procedures Law and reflect the UAE’s commitment to ensuring compliance and proper enforcement of tax obligations.
Key Highlights of Cabinet Decision No. 75 of 2023 and Amendments:
1. Scope of Application
- Applies to violations related to the Corporate Tax Law, in addition to other existing tax laws and procedures.
- Supplements and overrides certain provisions of Cabinet Decision No. 40 of 2017 in relation to Corporate Tax.
2. General Definitions
- Tax: Corporate Tax under Federal Decree-Law No. 47 of 2022.
- Administrative Penalties: Monetary penalties for breaches of tax laws and related cabinet decisions.
- Tax Audit, Due Tax, Tax Difference, and Declaration: Defined in alignment with the Corporate Tax Law and Tax Procedures Law.
3. Administrative Penalties: Key Violations and Related Fines
- Failure to maintain required records and information: AED 10,000 per violation; AED 20,000 for repeated violations within 24 months.
- Failure to submit data, records, and documents in Arabic when requested: AED 5,000.
- Failure to submit deregistration application on time: AED 1,000 per month, capped at AED 10,000.
- Failure to inform FTA about changes to tax records: AED 1,000 per violation; AED 5,000 for repeated violations.
- Failure to notify FTA about appointment of legal representative: AED 1,000.
- Late filing of Tax Return by legal representative: AED 500/month (first 12 months), AED 1,000/month (thereafter).
- Late filing of Tax Return by registrant: AED 500/month (first 12 months), AED 1,000/month (thereafter).
- Failure to settle Payable Tax: 14% annualized monthly penalty on unpaid amount.
- Incorrect Tax Return submission: AED 500 (if corrected before deadline).
- Voluntary Disclosure of errors in Tax Return/Assessment/Refund: 1% monthly penalty on Tax Difference from due date until disclosure.
- Non-disclosure of errors before Tax Audit notification: 15% fixed penalty + 1% monthly on Tax Difference.
- Failure to facilitate Tax Audit: AED 20,000.
- Failure or late submission of required Declarations: AED 500/month (first 12 months), AED 1,000/month (thereafter).
- Failure to submit Tax Registration application on time (as amended in Cabinet Decision No. 10 of 2024): AED 10,000.
4. Monthly Penalty Calculation
- For monthly penalties, if a month lacks a corresponding date (e.g., no February 30), the last day of the month applies.
- Penalties continue to accrue on the same day each month until rectified.
5. Effective Dates and Transitional Provisions
- Cabinet Decision No. 75 of 2023 took effect on 1 August 2023.
- Amendments introduced by Cabinet Decision No. 10 of 2024 are effective from 1 March 2024.
- The Decision has been published in the Official Gazette and is legally enforceable.
Conclusion:
The Cabinet Decision No. 75 of 2023, along with its amendments, provides a comprehensive framework for administrative penalties under UAE Corporate Tax Law. This reflects the UAE’s intent to ensure compliance, accuracy in reporting, and timely fulfillment of tax obligations.
Businesses should carefully review and align their tax compliance processes to avoid exposure to significant penalties under this Decision.
KGRN Chartered Accountants is available to assist with tax compliance reviews, filing obligations, risk assessments, and strategic advisory on Corporate Tax law and regulations. Reach out to us for proactive support and expert tax advisory services.
