In depth
Published on the FTA website on 6 November 2024, the public clarification TAXP007 relates to a Cabinet Decision that has not yet been published in the Official Gazette. This decision should determine the implementation date of the grace period.
According to Article 6(4) of the Cabinet Decision No. 74 of 2023 on the Executive Regulation of the Federal Decree-Law No. 28 of 2022 on Tax Procedures, taxpayers registered with the FTA are required to notify the Authority within 20 business days of any event that would might require the amendment of their data kept by the FTA, including:
- Name, address and registered email address
- Trade license activities
- Legal entity type
- Nature of the taxpayer's business
- The address from which the business is conducted by the registrant (if applicable)
Failure to notify the FTA within the prescribed timeline would trigger an administrative penalty varying from AED 1,000 to AED 10,000.
However, in accordance with the Cabinet Decision referred to in the FTA public clarification, no such administrative penalty should be imposed from 1 January 2024 to 31 March 2025.
This grace period now allows taxpayers approximately a further five months to ensure that their tax records are updated with the FTA and allow the FTA sufficient time to enhance its FTA portal capabilities to allow these changes to be implemented.
What does it mean for your business?
- If an administrative penalty for any failure to notify the FTA of changes in your tax records has already been issued during the grace period, it will be cancelled automatically.
- If you already paid such penalty, it will be reversed automatically (i.e., the administrative penalty amount shall be added back to your tax accounts). This should be monitored and flagged with the FTA if the qualifying reversal has not been reflected in your tax account.
- During the grace period, if you fail to inform the FTA of changes in your tax records within the prescribed timeline, no administrative penalty should be imposed.
Our recommendation
We recommend that taxpayers facing practical challenges with updating its registration details on the FTA portal ensure that emails the FTA with evidence of the issues faced and any necessary FTA reference number obtained for any escalated matters and ensures it forms part of its audit trail. This can be evidenced to the FTA should the penalties not be automatically reversed or be used as evidence as part of a separate waiver of penalties request.
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To speak with us in relation to any of the proposed changes, or any tax and transfer pricing matters or issues more generally, please contact one of the team members above.
