
Grace period provided to update information in UAE Tax records
No penalty for failure to update tax records by 31st March 2025
Background
- Tax registrants are required to update their tax records (for example – Name, address, email address, trade license activities, legal entity type etc.) with the Federal Tax Authority (“the FTA”) within 20 business days.
- Delay or failure to update the tax records attracts penalty.
Recent Public Clarification (TAXP007)
Grace period provided to update information in tax records without incurring penalty
- No administrative penalties applicable for updating tax records during the grace period between 1st January 2024 to 31st March 2025.
- Penalty (if any) imposed earlier for failing to update tax records between 1st January 2024 to 31st March 2025 – would be reversed or credit will be granted for payment.
- Registrants are not required to contact FTA for the reversal. It will be done automatically.
- Updating information in the Tax records includes following changes
- Name, address, and email address
- Trade license activities
- Legal entity type, partnership agreement for unincorporated partnerships, and articles of association or its equivalent
- Nature of the business of the registrant
- Address from which business is conducted
- Examples of instances covered under this Public Clarification:
- Failure to update about new branch opening or to upload its trade license
- Failure to update new business address
- Failure of existing VAT/Excise registrants to update records, before registering for Corporate Tax
- Registering for Corporate Tax with incorrect details and failure to correct the incorrect information
MCA Comments
- This public clarification will be of great help for businesses to update their tax records without incurring penalties, while transitioning to the corporate tax compliances.
- Many tax registrants have faced penalties for failure to update tax records, upon registering for corporate tax. These registrants can now take advantage of the grace period outlined in the recent public clarification.
- We encourage all registrants to take the maximum benefit of this relief / grace period by reviewing and updating tax records. Penalty (if any) levied earlier should also be tracked for reversal or credit.
- It is important to note that the benefit of this public clarification is available only for failure to update tax records. Therefore, penalty levied for delay in registering for VAT or corporate tax would not be covered.
Disclaimer: This is a summarised version of the UAE tax legislation and it is advised to refer to the detailed law provisions prior to initiating any decisions.
Please feel free to contact us for any further clarification/impact assessment.
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