Tax Assessments and Penalties: UAE Corporate Tax Law
The UAE Corporate Tax Law (CT Law) establishes a system of corporate taxation in the United Arab Emirates. The CT Law applies to all companies that are incorporated or registered in the UAE, as well as to all branches of foreign companies that are located in the UAE.
The CT Law sets a flat tax rate of 9% on the taxable income of companies. However, companies with taxable income of up to AED 375,000 will be subject a tax rate of 0%. Below table describes Violations and Administrative Penalties on the Taxation of Corporations and Businesses.
Table of Violations and Administrative Penalties Annexed to Cabinet Decision No. (75) of 2023 on Violations Related to the Application of Federal Decree-Law No. (47) of 2022 on the Taxation of Corporations and Businesses
No. | Description of Violation | Administrative Penalty Amount in AED |
1. | Failure of the Person conducting a Business or Business Activity or having a Tax obligation under the Tax Procedures Law or the Corporate Tax Law to keep the required records and other information specified in the Tax Procedures Law and the Corporate Tax Law. | One of the following penalties shall apply:
1. 10,000 for each violation. 2. 20,000 in each case of repeated violation within 24 months from the date of the last violation. |
2. | Failure of the Person conducting Business or Business Activity or having a Tax obligation under the Tax Procedures Law or the Corporate Tax Law to submit the data, records and documents related to Tax in Arabic to the Authority when requested. | 5,000 |
3. | Failure of the Registrant 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. |
4. | Failure of the Registrant to inform the Authority of any case that may require the amendment of the information pertaining to his Tax record kept by the Authority. | One of the following penalties shall apply:
1. 1,000 for each violation. 2. 5,000 in each case of repeated violation within 24 months from the date of the last violation. |
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. | 1. 500 for each month, or part thereof, for the first twelve months. 2. 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. |
7. | Failure of the Registrant to submit a Tax Return within the timeframe specified in the Corporate Tax Law. | 1. 500 for each month, or part thereof, for the first twelve months. 2. 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 of the Taxable Person to settle the Payable Tax. | 1. A monthly penalty of 14% per annum, for each month or part thereof, on the unsettled |
No. | Description of Violation | Administrative Penalty Amount in AED |
|
| Payable Tax amount from the day following the due date of payment and on the same date monthly thereafter.
2. 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. | The Registrant submits an 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. |
10. | The submission of a Voluntary Disclosure by the Taxable Person 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. | A 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 Taxable Person 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:
1. A fixed penalty of 15% on the Tax Difference.
2. A monthly penalty of 1% on the Tax Difference, for each month or part thereof, to be applied as follows:
a. Where the Taxable Person 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 Taxable Person 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. |
No. | Description of Violation | Administrative Penalty Amount in AED |
12. | Failure of a Person 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 |
13. | Failure of a Person to submit, or late submission of a Declaration to the Authority, as required in accordance with the provisions of the Corporate Tax Law. | 1. 500 for each month, or part thereof, for the first twelve months. 2. 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. |
It is important for companies to understand the CT Law and the penalties that can be imposed for non-compliance. By complying with the law, companies can avoid these penalties and ensure that they are paying the correct amount of tax.
Here are some additional things to keep in mind about tax assessments and penalties under the UAE Corporate Tax Law:
- The tax authorities have the right to conduct audits of companies to ensure that they are complying with the law.
- Companies are required to keep accurate records of their financial transactions.
- Companies are required to provide the tax authorities with any information that they request.
If you have any questions about tax assessments or penalties under the UAE Corporate Tax Law, you should consult with a tax advisor.
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