UAE releases new penalty laws against tax violation

Prior to the launch of VAT system in the country, the UAE Council of Ministers has recently released some new penalties to deal with the cases of tax violations. The decision was made by the cabinet according to which a minimum penalty of Dh500, but not more than triple of the tax value in question, will be levied on any kind of tax violation.

The meeting was held on Monday under the supervision of the current UAE Prime Minister, His Highness Shaikh Mohammad Bin Rashid Al Maktoum.

Many rules were made and penalties were decided on non-compliance of tax rules across the country. After the launch of excise tax in UAE, it has been made mandatory for businesses to keep the full accounting of their business stock and maintain other records properly. If a business fails to keep and maintain proper tax records and related information as described in the laws, it will have to pay a fine of Dh10,000 for the first offense and Dh50,000 on repetition.

In case if a business doesn’t display the right prices of items inclusive of the excise tax, they may have to pay a fine of Dh15,000 to the authorities.

The UAE Finance Minister, Shaikh Hamdan Bin Rashid Al Maktoum, on the occasion, said, “These decisions bring an added layer of transparency to the Authority’s relationship with its customers.” He added, “This, in turn, provides extra incentive for stakeholders and all concerned parties to abide by tax regulations.”

VAT is also going to be launched very soon, probably by the beginning of next year, in the country. The new rules state that the taxable goods must be kept in a designated zone as per the conditions and procedures specified for it, otherwise there will be a penalty of Dh50,000 on non-compliance of any of the rules.

Shaikh Hamdan also said, “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.” He 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.”

The decision was also made regarding the fees to be collected by the Federal Tax Authority (FTA) on the services provided to its clients. Some of the services like registration under tax and the issuance of an e-tax certificate will not occur any charge. However, the customers will have to pay a Dh500 fee for the application for an attested paper registration certificate.

Accounting software provider firms will have to pay Dh10,000 as registration/renewal fee for one year, and the registration of a designated zone for a year will cost Dh2,000. Tax agents will be able to get services like new registrations and renewals by paying a fee of Dh3,000 for three years. The registration of a warehouse keeper or issuance of an e-warehouse keeper registration certification are free of charge, but the customer will have to pay Dh500 on request for an official printed certificate.

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