Federal Tax Authority: Any Person Or Group Has The Right To Apply For A Reduction Or Exemption For Tax Law Violation Penalties
The Federal Tax Authority (“FTA”) has announced that any person or group has the right to apply to the FTA to reduce or exempt them from the penalty imposed for the violation of the provisions of tax legislation, provided that there is an excuse acceptable to the FTA, which is supported by evidence that justifies the existence of the excuse and the violation that led to the imposition of administrative penalties.
The FTA clarified that according to Cabinet Decision No. 51 of 2021 on amending the Executive Regulation of Federal Law on Tax Procedures, any person or group who is found to have violated the provisions of the law or the tax law may submit such a request to the FTA to reduce or exempt from the penalties imposed by the FTA in accordance with a set of conditions.
The FTA indicated that the conditions require that the person has an excuse that is acceptable to the FTA, along with evidence that justifies the excuse and the violation it caused which led to the imposition of administrative penalties, provided that the FTA is notified of the request for reduction or exemption within 40 business days from the end of the acceptable excuse, in accordance with the mechanism specified by the FTA. Also, the person must prove that the violation has been corrected, and the application for exemption or reduction is submitted in accordance with the form specified by the FTA.
The FTA confirmed that, according to the amendments that came into effect on 28 April 2021, an excuse shall not be considered acceptable if the act that led to the violation was deliberate. An excuse can only be deemed acceptable based on a decision made by a tripartite committee to be formed by a decision issued by the Director-General of the FTA. This committee is concerned with studying the excuse and accepting or rejecting it, and will issue its decision to reduce or exempt administrative penalties within 40 business days from the date of receiving the application. Applicants shall be notified of this decision within 10 business days from the date of its issuance.
Federal Tax Authority
By virtue of this Federal Law by Decree a public federal authority shall be established under the name of the Federal Tax Authority. The headquarters of the authority shall be located in the city of Abu Dhabi. The authority shall be in charge of managing and collecting federal taxes and related fines, distributing tax-generated revenues and applying the tax-related procedures in force in the UAE.
The authority shall be managed by a board of directors chaired by the Minister of Finance and a sufficient number of members to be appointed and remunerated by a Cabinet resolution, based on the chairman’s nomination. The authority shall have an independent annual budget that shall be deemed as public funds and exempted from all taxes and fees.