Starting from January 1, 2024, and running through to March 31, 2025, businesses will have the opportunity to correct any issues with their tax filings without facing late penalties.
This grace period is meant to support businesses in getting their tax records in order, helping to ensure compliance without the burden of financial penalties.
How Does the Grace Period Work?
Under the new decision, businesses that have missed or are in the process of registering for corporate tax can now take the time to correct their tax filings without incurring fines. This means that if any penalties were paid between January 1, 2024, and the end of the grace period, businesses will have those penalties refunded.
This initiative is part of the UAE’s effort to support businesses and improve tax compliance while also maintaining fairness. The decision falls in line with the Penalty Refund Procedures outlined in Cabinet Decision No. (105) of 2021, which sets out the framework for paying, waiving, and refunding administrative penalties.
As Khalid Ali Al Bustani, Director-General of the FTA, said: “We encourage all those registered with the Authority to comply with tax legislations in order to avoid administrative penalties.”
What Does This Mean for Your Business?
While the grace period offers relief from fines for any discrepancies, it’s important to remember that businesses are still required to update the FTA about certain changes within a specified period. These changes include:
- Change of manager
- Update of business address
- Issuance of new licenses
- Legal form changes
- Partnership agreements for joint ventures, etc.
Normally, businesses must report these changes to the FTA within 20 business days. If they fail to do so, companies could face penalties of up to AED 10,000 per violation.
However, with the new grace period, businesses have the opportunity to make corrections and report any updates without the worry of facing penalties during this time. If you’ve missed a filing deadline or need to amend any details, now is the time to do it without facing hefty fines.
The corporate tax landscape in the UAE is evolving, and staying compliant with regulations is key to ensuring your business runs smoothly. With the new grace period, businesses have the flexibility to address any outstanding issues and remain in good standing with the FTA.
Next Steps: What Should You Do?
1.Review Your Tax Records: Take a closer look at your tax filings and ensure all the details are correct. If there are discrepancies, now is the time to fix them.
2.Report Any Changes: If there have been any changes to your business structure or contact details (such as a change of manager or business address), make sure to report them to the FTA.
3.Take Advantage of the Refunds: If you’ve already paid penalties this year, ensure you submit your request for a refund before the grace period ends.
Conclusion
The UAE’s corporate tax grace period is an excellent opportunity for businesses to rectify any tax-related issues without the risk of penalties. Be proactive in taking advantage of this grace period, and make sure your business is fully compliant with the latest tax regulations.
Remember, while this period offers a chance to correct your records without penalties, staying ahead of any future changes and compliance requirements will help your business avoid any potential headaches down the road.
