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FTA Updates on Administrative Penalties

FTA has come with recent update on the changes to VAT Legislations. They are listed below:

Redetermination of Administrative Penalties

Extension of date to 31st December 2022 for requirements relating to Redetermination of Administrative Penalties

FTA has amended Cabinet Decision No 40 of 2017 on Administrative Penalties. The amendment is primarily related to Redetermination of Administrative Penalties. The date for meeting the requirements of redetermination of Administrative Penalties (levied prior to 28th June 2021) has been extended to 31stDecember 2022. This decision will come into effect 60 days from the date of issuance and detailed procedures for its applicability shall be issued shortly.

Download FTA Notification

Payment by Instalments / Waiver of Administrative Penalties

FTA has specified vide Cabinet Decision No 105 of 2021 conditions for Instalment Payment/ Waiver of Administrative Penalties.

The conditions for Payment by Instalments are specified below:

  • It is related to unsettled penalties only
  • Administrative Penalties exceed AED 50,000
  • It is not subject to dispute before the Tax Disputes Resolution Committee, competent courts. Disputes in Reconsideration Mechanism will not be considered for exclusion
  • No payable tax should be outstanding for the related tax period

The conditions for waiver of Administrative Penalties are specified below:

  • Violation should not be related to tax evasion crime
  • Request for Waiver should be within the time period specified
  • The waiver request shall be related to the following circumstances as a direct cause of non-compliance:
    • Death/Illness of the registered natural person or owner of sole establishment
    • Death/Illness of key employee of the registered natural person or owner of sole establishment
    • Restrictions/Precautionary/Preventive procedures imposed by Government authorities
    • General malfunction in the Authority systems, payment gateways or used telecommunication services
    • Custodial sentence execution on the registered person or owner of sole establishment
    • Obligations and due tax amounts are settled through another person registered with Tax Authority
    • Person has been declared insolvent/bankrupt and all due taxes were being settled before the declaration
    • Any other cases assessed by Committee
  • Only one request for Settlement/Waiver can be made at one time
  • The screened instalment request will be presented to the Committee within 40 business days of its receipt
  • The Committee shall decide on the instalment request within 60 business days of the submission to the Committee
  • The Authority shall notify the Tax payer within 10 business days of the Committee decision
  • The Tax Payer shall commit to pay the instalments in line with the Committee decision
  • The above process will come into effect from 1st March 2022
Download FTA Notification

This is a summarised version of the recent FTA legislations and the detailed legislations should be referred prior to taking any tax treatment decisions.

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