The Cabinet Decision No. 40 of 2017 directs some administrative penalties on violators of Excise tax, VAT, or other procedures related to taxation. However, the said authority has issued amendments to some clauses of this decision. According to this amendment, redetermination of administrative penalties pertaining to violations of certain laws are mentioned and the previous decision has undergone modifications. This amendment was issued on 28th April 2021 and is titled the Cabinet Decision No. 49 of 2021.
These reconsiderations apply to all decisions of penalties executed on violators according to Cabinet Decision No. 40 of 2017.
Redetermination of Administrative Penalties Under Cabinet Decision No. 40 of 2017
The redetermination of administrative penalties aims to deliver concession to companies penalized according to Cabinet Decision No. 40 of 2017, by allowing the FTA to reconsider the amount of pending dues penalties. However, to be eligible for this redetermination of administrative penalties, the penalized business needs to meet certain requirements. They are:
- The violator business is already penalized as per the Cabinet Decision No. 40 of 2017, before the application of Cabinet Decision No. 49 of 2021
- The violator is yet to settle the administrative penalties in accordance with Cabinet Decision No. 40 of 2017 before 28th June 2021
- The levied individual undertakes the following:
- The person in question has settled his complete payable taxes before the FTA before 31st December 2021. The amount must be settled before the mentioned date, whether its payment date is before, or after, 28th of June 2021.
- Whatever amount of penalty is imposed on the person, he has to settle 30% of the said amount before 31st December 2021.
It is important to note that in order to qualify for redetermination of administrative penalties, all afore mentioned conditions should be met. In such a case, the person will be relieved of paying the remaining 70% amount of the total penalty.
Explanation by Exemplification
Instance of Reconsideration of Administrative Penalties
Suppose that the FTA penalizes an individual with AED 12,000 according to Cabinet Decision No. 40 of 2017. The person pays AED 2000 (before 28th June 2021). On 28th of June 2021, AED 10,000 remains unpaid. The penalized individual pays his payable taxes and pending tax returns in 2021, and also pays 30% of the remaining amount i.e. AED 3000 (30% of AED 10,000 is AED 3,000).
In such instance, the person qualifies to the redetermination of administrative penalties and the FTA will waive off the remaining 70% amount of AED 7000.
Instance of Rejection of Reconsideration
The FTA penalizes a taxable individual with AED 12,000. The person pays AED 2,000 before 28th June 2021. On 28th June 2021, he now has AED 10,000 still unsettled. The penalized individual pays the 30% of unsettled amount, i.e. AED 3,000, but does not settle his annual tax returns by the end of 2021.
In such instances, will have to pay the remaining amount of 70% i.e. AED 7,000 to the FTA, as he does not qualify for redetermination of administrative penalties.
Benefits of Redetermination of Administrative Penalties
The major benefit of such concessions and reconsiderations is to:
- Maintain a sense of responsibility among registered tax-payers
- Encourages vigilance among tax-payers against any possible penalization
- Encourages timely settlement of dues by penalized individuals
- Recognizes and appreciates the sense of responsibility by the penalized registrant by relieving them of pending amounts and other concessions
- Ensures abiding of laws, rules, and regulations
About BS Auditing
BS Auditing of Accounts thoroughly understands all FTA VAT laws, their amendments, and their implications for all registered taxpayers in the UAE. Our skilled professionals provide the best assistance in such matters and effectively guide all registered taxpayers to keep their records in order and ensure timely settlement of their annual tax returns. BS Auditing understand the significance of abiding by FTA laws and encourages all residents to follow the outlined procedures and protocols. For detailed guidance and assistance, in this respect, and thorough consultation in other accounting and auditing-related services, feel free to contact us:
• Office # 0641, Tamani Arts Offices, Business Bay, P.O. Box 111390, Dubai, UAE
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