UAE Corporate tax Penalties: A Detailed Guide
The UAE Corporate Law (Federal Law No. 2 of 2015) sets out a comprehensive framework for the regulation of companies in the UAE. The law also prescribes a number of penalties for violations of its provisions.
Administrative penalties are imposed by the Ministry of Economy (MoE) or the relevant authority. They are typically financial in nature, but they may also include other measures, such as the suspension or cancellation of a company's license.
The following are some of the administrative penalties that may be imposed under the UAE Corporate Law:
| No. | Description of Violation | Administrative Fine Penalty Amount in AED |
|---|---|---|
| 1. | Penalties apply if records and information required by the Tax Procedures Law or the Corporate Tax Law are not kept up to date: | 10,000 AED for each infraction. 20,000 AED for repeated offenses committed within 24 months of the last violation. |
| 2. | Penalties for failing to provide the Authority with tax-related information in Arabic records, documents, and data | 5000 AED |
| 3. | Penalty under the Corporate Tax Law for the Registrant's late submission of the deregistration application | 1,000 AED for late submission and no more than 10,000 each month. |
| 4. | Penalties for failing to alert the Authority of any situation necessitating a revision of Tax record information | 1000 AED for each violation. 5,000AED for repeated violations that occur within 24 months of the previous violation. |
| 5. | Legal Representatives will be penalized if they fail to send out appointment notifications: | 1,000 AED |
| 6. | Penalties for not filing a tax return by the legal representative | For the first 12 months, 500 AED will be given for each full or partial month. Starting with the thirteenth month, 1,000 AED for each month or part thereof. |
| 7. | Penalties for not submitting a tax return by the Registrant | 500 AED for each full or partial month throughout the first 12 months. 1,000 AED for each month or part of a month after the thirteenth month. Penalties begin the day after the deadline for filing a tax return and are assessed monthly after that. |
| 8. | If the individual does not correct their tax return before the Corporate Tax Law deadline for submission, they will be subject to a penalty of 500. | 1,000 AED |
| 9. | Voluntary Disclosure (errors in Tax Return, Assessment, or Refund) | From the due date until the voluntary disclosure, there is a 1% monthly penalty on the Tax Difference. |
| 10. | Failure to submit Voluntary Disclosure (before Tax Audit) | The tax difference is fixed at 15%. From the deadline until the issuing of the voluntary disclosure or tax assessment, 1% of the monthly tax difference is required. |
| 11. | Failure to offer facilitation to Tax Auditor | 20,000 AED |
| 12. | Late submission of Declaration | For the first 12 months, pay 500 AED every month. From the thirteenth month onward 1,000 each month |
The following are some of the criminal penalties that may be imposed under the UAE Corporate Law:
Fraudulent trading: Imprisonment for up to five years and a fine of AED 1 million.
Insider trading: Imprisonment for up to three years and a fine of AED 500,000.
Money laundering: Imprisonment for up to 20 years and a fine of AED 5 million.
It is important to note that the penalties under the UAE Corporate Law are subject to change. Businesses should consult with a lawyer to ensure that they are aware of the latest penalties that may apply to them.
In addition to the penalties under the UAE Corporate Law, businesses may also be liable for civil damages if they violate the law. Civil damages are awarded to compensate the injured party for their losses.
The amount of civil damages that may be awarded will depend on the specific circumstances of the case. However, they can be significant, and businesses should take steps to avoid them.
By understanding the penalties under the UAE Corporate Law, businesses can take steps to avoid them and protect themselves from financial losses.
Here are some additional things to keep in mind about the penalties under the UAE Corporate Law:
The penalties may be imposed in addition to other penalties, such as interest and fines.
Businesses may be able to reduce or waive the penalties if they can demonstrate that they took reasonable steps to comply with the law.
Businesses should seek legal advice if they have any questions about the penalties under the UAE Corporate Law.
HORIZON EBS is already ready for the UAE Corporate Tax and we offer you our best service throughout implementation and forever. With Horizon EBS, we ensure that your business will flourish in the days to come with a properly streamlined business process. We are here to help you with all your
requirements, you can write to us at sales@fit.ae or give us a call at +971 4 3533 727.
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