The Ministry of Finance today announced the issuance of cabinet Decision No. 10 of 2024, amending the schedule of violations and administrative penalties of cabinet Decision No. 75 of 2023 on the administrative penalties for violations related to the applications and businesses. Cabinet Decision No.10 of 2024 will come into effect on march 1, 2024.
The Ministry stated that a penalty of AED 10,000 will be imposed on businesses for late registration of UAE Corporate Tax if they fail to submit their Corporate Tax registration applications within the deadlines set by the Federal Tax Authority.
The penalty was introduced to motivate taxpayers to comply with tax regulations by registering for corporate tax on time. The amount of the penalty for late tax registration is consistent with the penalties for late registration of excise tax and value-added tax.
Table of Violations and Administrative Penalties Attached to Cabinet Decision No. (75) of 2023, Concerning Violations of Federal Decree-Law No. (47) of 2022 on the Taxation of Corporations and Businesses.
| No. | Description of Violation | Administrative Fine Penalty Amount in AED |
|---|---|---|
| 1. | Penalties will be applied if the records and information required by the Tax Procedures Law or the Corporate Tax Law are not kept current. | 10,000 AED for each infraction. 20,000 AED for repeated offenses committed within 24 months of the last violation. |
| 2. | Penalty under the Corporate Tax Law for the Registrant’s late submission of the deregistration application | 1,000 AED for late submission and no more than 10,000 each month. |
| 3 | Penalties for failing to provide the Authority with tax-related information in Arabic records, documents, and data | 5000 AED |
| 4. | Legal Representative will be penalized if they fail to send out appointment notifications: | 1,000 AED |
| 5. | If the individual does not correct their tax return before the Corporate Tax Law deadline for submission, they will be subject to a penalty of 500. | 1,000 AED |
| 6. | Penalties for not filing a tax return by the legal representative | For the first 12 months, 500 AED will be given for each full or partial month. Starting with the thirteenth month, 1,000 AED for each month or part thereof. |
| 7. | Penalties for not submitting a tax return by the Registrant | 500 AED for each full or partial month throughout the first 12 months. 1,000 AED for each month or part of a month after the thirteenth month. Penalties begin the day after the deadline for filing a tax return and are assessed monthly after that. |
| 8. | Penalties for failing to alert the Authority of any situation necessitating a revision of Tax record information | 1000 AED for each violation. 5,000AED for repeated violations that occur within 24 months of the previous violation. |
| 9. | Failure to offer facilitation to Tax Auditor | 20,000 AED |
| 10. | Failure to submit Voluntary Disclosure (before Tax Audit) | The tax difference is fixed at 15%. From the deadline until the issuing of the voluntary disclosure or tax assessment, 1% of the monthly tax difference is required. |
| 11. | Voluntary Disclosure (errors in Tax Return, Assessment, or Refund) | From the due date until the voluntary disclosure, there is a 1% monthly penalty on the Tax Difference. |
| 12. | Late submission of Declaration | For the first 12 months, pay 500 AED every month. From the thirteenth month onward 1,000 each month |
Starting from August 1, 2023, administrative fines and penalties for corporate tax in the UAE will apply to businesses, tax individuals, and Free Zone person.
CT Fines For Late Registration
Every business must register for Corporate Tax and secure a registration number. It’s essential to submit all required documents accurately during registration. Failure to register on time or delays in registration can result in substantial fines.
Corporate Tax Penalties For Late Return Filing
Corporate Tax penalties for late return submissions can be quite severe. For example, if a business’s fiscal year ends in April and the tax return is due on March 15th, failing to adhere to federal decree laws or submitting the return after the deadline may lead to significant fines in Dirhams.
Penalty For Late Payment of Corporate Tax
In the UAE, the following formula is commonly used to determine the late payment penalty for corporate tax:
- For the first month of delay, a fixed penalty is imposed, usually calculated as a percentage of the outstanding tax amount.
- Each additional month of delay incurs an extra fixed penalty.
- Interest is charged on the overdue tax amount from the due date until the full payment is made.
It is crucial for companies to pay their corporate taxes on time to avoid these fines and any potential penalties. To Prevent financial Hardships and keep a good reputation with the tax authorities, it is crucial to comply with tax laws and immediately pay tax responsibilities.
Corporate Tax Services by YUGA Accounting & Tax Consultancy guide you through a step-by-step process, assessing your business to ensure successful implementation of Corporate Tax while complying with all UAE Corporate Tax laws set by the FTA.
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