The UAE’s Ministry of Finance and the Federal Tax Authority (FTA) announced today the issuance of a Cabinet Decision launching an initiative to waive administrative penalties for corporate taxpayers and certain exempt persons who failed to submit their tax registration applications with the FTA within the required timeframe.
To qualify, eligible parties must file their tax return or annual statements within a period of not more than 7 months from the end of their first tax period, as stipulated under the Corporate Tax Law.
FTA to refund administrative fines for meeting specified criteria
The UAE Cabinet’s decision reflects the proactive approach of the Ministry of Finance and the FTA to enhance tax compliance among corporate taxpayers. It aims to encourage registrants to file tax returns or annual statements before the deadline, bolstering early compliance with legal requirements. Additionally, the FTA confirmed that necessary procedures will be implemented to refund administrative fines collected from those who meet the specified criteria.
The initiative reaffirms the continued commitment of the Ministry of Finance and the Federal Tax Authority to enhancing the tax compliance environment in the UAE, facilitating procedures and easing financial burdens on businesses. It aims to enable taxpayers to meet their obligations smoothly and benefit from the exemptions, provided they file their tax returns or annual declarations within the prescribed timeframe.
Read| UAE corporate tax: Finance ministry amends decision on audited financial statements
Decision to ensure better compliance
The decision is expected to significantly support the UAE’s ongoing effort to ensure better compliance during the first year of corporate tax implementation.
It also underscores the government’s commitment to supporting national businesses by providing incentives that encourage voluntary compliance, reduce administrative and financial burdens associated with tax registration, and further strengthen the UAE’s standing across global competitiveness indices.
The decision comes after the UAE amended Ministerial Decision No. 82 of 2023 on audited financial statements for corporate tax purposes last month. In the updated ministerial decision, the ministry clarified the requirements for the preparation and maintenance of audited financial statements in accordance with Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses.
The updated decision sets out clear requirements for tax groups to prepare audited financial statements. All tax groups will be required to prepare audited special-purpose aggregated financial statements. However, to mitigate the compliance burden on tax groups and in line with the UAE’s commitment as a business-friendly jurisdiction, the underlying members of the tax group will not be required to prepare audited stand-alone financial statements.
