Grace Period for Updating Tax Records

Grace period for updating Tax

On November 6, 2024, the UAE Federal Tax Authority published a public clarification on the tax procedures (TAXP007), which explained the grace period and penalty waiver for updating tax records. The Public Clarification issued by the FTA is meant to clarify certain aspects related to the implementation of Federal Decree-Law No. 28 of 2022 on Tax Procedures and its amendments and Cabinet Decision No. 74 of 2023 on the Executive Regulation of Federal Decree-Law No. 28 of 2022 on Tax Procedures.

The Tax Procedure

All taxable person has to keep their tax accounts up to date with all relevant documents and information. Any amendment in details/documents provided at the time of registration (either Value Added Tax or Corporate Tax or Excise Tax), it has to be updated in the Emaratax platform within 20 business days from the date such event occurred. There can be an administrative penalty imposed on the failure to update the tax records within the stipulated time specified. Below are a few examples of information related to the tax records that required updating at the time of amendment, if any.

Name, address, and email address
Activities as per the trade license
Legal type of the entity, legal documents like a partnership agreement or Memorandum of Association/Articles of Association.
Nature of the business
Details of shareholders

The above-given are a few examples, and there can be many other changes that may happen in the taxable person’s business that are required to be updated within 20 business days in order to avoid administrative penalties.

Certain examples are outlined in the Tax Procedures Public Clarification (TAXP007), which may attract administrative penalties in case of failure of tax procedure compliance.

Failing to inform the FTA within the prescribed timelines that a new branch was opened and to upload the new trade license for that branch.
Failing to inform the FTA within the prescribed timelines that the business moved to another address.
Failure of a VAT/Excise Tax registered person to update records within the prescribed timelines before attempting to register for Corporate Tax.
Registering for Corporate Tax with the incorrect details and failing to correct the information within the prescribed timelines.

Grace Period announced as per Tax Procedures Public Clarification (TAXP007)

The Federal Tax Authority, UAE, has explained the intention behind announcing the grace period for updating the tax records, which is encouraging taxpayers to update their tax records with all documents and details that are up-to-date.

The grace period is applicable from January 1, 2024, till March 31, 2025. During this period, any taxable person updates their tax records with the latest information and documents; the authority will not impose any administrative penalties. Furthermore, any administrative penalties imposed from January 1, 2024, on the taxable person will be reversed.

Any taxable person who has already paid and settled the administrative penalty for not updating the tax records will be reversed and added back to their tax accounts. This reversal of paid or unpaid penalties will be automatically reflected, and the Federal Tax Authority clarified that taxable persons are not required to contact the authority for the update of the reversal.

This positive step from the authority will give a fair chance to all registrants to keep their tax records up to date with all the latest information without incurring any administrative penalties. By giving this grace period, FTA expects the taxable person to take advantage and continue updating the tax records in the future as well.

To learn more about Grace Period for Updating Tax Records, book a free consultation with one of the Flyingcolour team advisors.

Disclaimer: The information provided in this blog is based on our understanding of current tax laws and regulations. It is intended for general informational purposes only and does not constitute professional tax advice, consultation, or representation. The author and publisher are not responsible for any errors or omissions, or for any actions taken based on the information contained in this blog.