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Document Type: PC - Public Clarification
Guidance Code: TAXP007
Year: 2024
Related Law: uae-cit-fdl-47-of-2022
Authority: Federal Tax Authority

Grace period to update information in tax records - TAXP007

TAXP007 - Grace period to update information in tax records

TAXP007

Tax Procedures Public Clarification

Grace period to update information in tax records

Issue

Registrants are required to inform the FTA within 20 business days of the occurrence of any event that might require the amendment of information related to their tax records kept by the FTA.

Failing to inform the FTA within the prescribed period of such changes constitutes a tax violation and results in the imposition of administrative penalties.

To encourage registrants to update their records with the FTA, a Cabinet Decision was issued to implement a grace period in which registrants may rectify their tax records without incurring administrative penalties.

This Public Clarification provides more information regarding the special dispensation for updating records with the FTA.

Summary

Administrative penalties will not be imposed on registrants that update the information in their tax records during the grace period starting on 1 January 2024 and ending on 31 March 2025.

In instances where such administrative penalties were already imposed for failing to update information in the registrants’ tax records within the legally prescribed period, during the period from 1 January 2024 until the implementation of the grace period within the FTA’s system, these penalties will be reversed.

Detailed analysis

Introduction

Registrants[1] are required to inform the FTA of any event that might require the amendment of information related to their tax record kept by the FTA, including the following changes:

  • Name, address and email address.

  • Trade licence activities.

  • Legal entity type, partnership agreement for unincorporated partnerships and articles of association or its equivalent.

  • Nature of the business of the registrant.

  • The address from which any business is conducted by the registrant. [2]

Failure to inform the FTA of such changes within 20 business days from occurrence is a tax violation and is subject to administrative penalties. [3] [4] [5]

Grace period

To encourage registrants to update the information in their tax records held by the FTA, administrative penalties will not be levied when registrants update such information during the grace period starting from 1 January 2024 until 31 March 2025.

Furthermore, if an administrative penalty[4] was imposed on registrants during the period from 1 January 2024 until the implementation date of the grace period for failing to update the information in their tax records held by the FTA, such penalty will be reversed.

Where the registrants have settled the administrative penalty, the result of the reversal is that the reversed administrative penalty amount shall be added back to the persons’ tax accounts. [6]

Registrants are not required to contact the FTA to obtain a reversal of the administrative penalty, as this will be done automatically.

Examples

The following are examples of instances covered by this Public Clarification:

  • Failing to inform the FTA within the prescribed timelines that a new branch was opened and to upload the new trade licence for that branch.

  • Failing to inform the FTA within the prescribed timelines that the business moved to another address.

  • Failure of VAT/Excise Tax registered person to update records within the prescribed timelines before attempting to register for Corporate Tax.

  • Registering for Corporate Tax with the incorrect details and failing to correct the information within the prescribed timelines.

This Public Clarification issued by the FTA is meant to clarify certain aspects related to the implementation of the Federal Decree-Law No. 28 of 2022 on Tax Procedures and its amendments and Cabinet Decision No. 74 of 2023 on the Executive Regulation of Federal Decree-Law No. 28 of 2022 on Tax Procedures.

This Public Clarification states the position of the FTA and neither amends nor seeks to amend any provision of the aforementioned legislation. Therefore, it is effective as of the date of implementation of the relevant legislation, unless stated otherwise.

Legislative References:

In this clarification, Federal Decree-Law No. 28 of 2022 on Tax Procedures and its amendments is referred to as “Decree- Law”, Cabinet Decision No. 74 of 2023 on the Executive Regulation of the Federal Decree-Law No. 28 of 2022 on Tax Procedures is referred to as “Executive Regulation”, Cabinet Decision No. 40 of 2017 on the Administrative Penalties for Violation of Tax Laws in the UAE, and its amendments, is referred to as “Cabinet Decision No. 40”, Cabinet Decision No. 105 of 2021 on Controls and Procedures for Paying Administrative Penalties by Instalments, and Waiving and Refunding Administrative Penalties is referred to as “Cabinet Decision No. 105” and Cabinet Decision No. 75 of 2023 on the Administrative Penalties for Violations Related to the Application of Federal Law No. 47 of 2022 on the Taxation of Corporations and Businesses, and its amendments, is referred to as “Cabinet Decision No. 75”.

Footnotes

[1] Article 1 of the Decree-Law defines the term “registrant” as the taxable person who has been issued a tax registration number.

[2] Article 6(4) of the Executive Regulation states that a registrant shall notify the Authority, in the form and manner approved by it, within 20 business days of any change to its data kept with the Authority, including:

  1. Name, address and email address.

  2. Trade licence activities.

  3. Legal entity type, partnership agreement for unincorporated partnerships and articles of association or its equivalent.

  4. Nature of the business of the registrant.

  5. The address from which any business is conducted by the registrant.

[3] Article 24(1)(e) of the Decree-Law states that the Authority shall issue an administrative penalties assessment for the person and notify him of the administrative penalties assessment within five business days for the registrant failing to inform the Authority of any case that requires the amendment of the information pertaining to his tax record kept by the Authority.

[4] Penalty No. 5 of Table No. 1 of Cabinet Decision No. 40 states that the failure of the registrant to inform the Authority of any circumstance that requires the amendment of the information pertaining to its tax record kept by Authority is:

  • AED 5,000 for the first time.

  • AED 10,000 in case of repetition.

[5] Penalty No. 4 of Table No.1 of Cabinet Decision No. 75 states that the failure of the person to inform the Authority of any case that may require the amendment of the information pertaining to his tax record kept by Authority is:

  • AED 1,000 for each violation.

  • AED 5,000 in each case of repeated violation within 24 months from the date of the last violation.

[6] Article 13(1) of Cabinet Decision No. 105 states that the refund of administrative penalties shall be added to the person’s tax account within 90 days from the decision to approve the refund of the administrative penalties.