UAE reveals penalties for new tax law violations

Federal Tax Authority says failure by retailers to display prices inclusive of Excise Tax will result in AED15,000 fine
UAE reveals penalties for new tax law violations
By Staff writer
Mon 02 Oct 2017 06:32 PM

The UAE on Monday announced a raft of penalties relating to the introduction of new tax laws in the country.

The UAE Council of Ministers adopted Cabinet Decision No. (39) of 2017 on Fees for Services Provided by the Federal Tax Authority and Cabinet Resolution No. (40) of 2017 on Administrative Penalties for Violations of Tax Laws in the UAE.

The Cabinet decision said that a fine must be no less than AED500 and no more than triple the value of the tax on the transaction in question.

The adoption comes a day after the UAE’s Excise Tax came into effect, doubling the price of tobacco and energy drinks, and increasing the price of soft drinks by 50 percent.

Soft drink prices will increase from AED1.50 to AED2.25 while the price of a pack of 20 cigarettes will double from AED8 to AED16.

The so-called “sin tax” is a precursor to the more general VAT on goods and services from January 1.

The Federal Tax Authority said the failure of retailers to display prices inclusive of Excise Tax would result in a AED15,000 penalty.
Under the new laws, failure to submit a tax return in the required timeframe will be met with a fine of AED1,000 for the first time and AED2,000 in case of repetition within 24 months.

Failure to keep required records will result in a fine of AED10,000 for the first incident and AED50,000 for future violations.

Failure to settle the payable tax will also see a late payment penalty consisting of 2 percent of the unpaid tax due immediately.

The law also stipulates that 4 percent is due on the seventh day following the deadline for payment while there will be a  daily 1 percent penalty charged on any amount that is still unpaid one calendar month following the deadline with an upper ceiling of 300 percent.

There will also be a fixed penalty for the submittal of an incorrect tax return of AED3,000 for the first time and AED5,000 for repeat incidents.
“These decisions bring an added layer of transparency to the Authority’s relationship with its customers,” said Sheikh Hamdan bin Rashid Al Maktoum, deputy Ruler of Dubai and UAE Minister of Finance. “This, in turn, provides extra incentive for stakeholders and all concerned parties to abide by tax regulations.
“All customers can refer to the official Directory of Services Fees to know what is required of them to be in compliance with tax procedures,” Sheikh Hamdan added. “The Directory is based on thorough studies that seek to provide the highest-quality service for the lowest cost, which resonates with the FTA’s mission and vision.”

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