TAX Updates UAE
FEB 2022
UAE Issues Rules on Instalment and Waiver of Administrative Penalties United Arab Emirates .
UAE Cabinet Decree No. 105 of 2021 was issued on 28 December 2021, providing new rules for the instalment and waiver of administrative penalties.
- Requests for the payment of administrative penalties in instalments may be approved if the following conditions are met:
o the instalment request concerns unsettled penalties only;
o the penalty amount is at least AED 50,000;
o the penalties are not disputed in front of the Tax Disputes Resolution Committee or the Federal Courts (excluding the reconsideration process); and
o the tax due for the tax period subject to the instalment request has been settled;
- Requests for the waiver of administrative penalties may be accepted in relation to certain cases as long as they do not involve tax evasion, including the following if directly causing the tax compliance failure:
o death or illness of the taxpayer if the taxpayer is a natural person or owner of an establishment; o death, illness, or resignation of a key employee of the tax registrant;
o the existence of restrictions and precautionary or preventive measures imposed by the UAE government;
o the failure of FTA systems, payment systems, or communication systems; o the taxes have been paid through the tax account of another registered taxpayer;
o the taxpayer is under insolvency or bankruptcy, subject to certain conditions; and
o other cases that may be accepted.
Regarding the process, it is provided that requests for both instalments and waivers of administrative penalties must be submitted to the FTA, which has 40 business days to review the request for compliance with all requirements.
If the request complies, it will then be referred to a committee established by the Chairman of the FTA, which has 60 business days to decide on the request and 10 days to notify the applicant. If no decision is given, the request is considered rejected. It is also provided that the committee may allow for a penalty waiver in respect of penalties paid in the previous 5 years, which if approved would result in a credit to the taxpayer’s account or a refund in case the taxpayer is no longer registered.
Federal Tax Authority grants extension of timeline for Redetermining the penalties Federal Tax Authority, during January 2022 has issued a public clarification that amends the timelines provided to benefit from the concessionary measures provided in the form of redetermination of administrative penalties. To benefit from the redetermination, all of the following conditions have to be met:
- Administrative penalties should be imposed on the person before 28 June 2021.
- The person has not settled all the administrative penalties imposed in full before 28 June 2021.
- Has paid at-least 30% of total unsettled administrative penalties that was imposed before 28 June 2021, before 31 December 2022.
Dubai Customs issues notice concerning procedures for Cross Border e-commerce
The Notice No. (15/2021) issued by Dubai Customs on procedures for Cross Border ecommerce with the purpose of simplifying and facilitating customs procedures and regulating the movement of goods through cross-border ecommerce channels, came into effect from 01 January 2022. This notice repeals Customs Notices No. (9/2021), (13/2021) and (14/2021). The major highlights of this notice are as follows:
- Companies wishing to conduct e-commerce activity must register or add activity in Dubai Customs registration system, without the need to add the activity in the Trade License
- Customs declaration will be processed automatically based on e-commerce orders and return orders through the Platform for personal customer
- Goods, except tobacco and derivative, electronic smoking devices and tools, nicotine liquids, beverages and foods containing alcohol, with value less than AED 300 are exempt from Customs duty
- Returned goods via companies for B2C shall be exempted from Customs Duty if returned within 60 days from date of exit
- Amendment or cancellation of goods declared in Declaration is permitted through the platform within 60 days of registration of the Declaration
- Customs Deposit Refund and claims settlement are automated for Declarations passed through Platform Companies wishing to benefit from the provision of the notice need to align and regularize their status for implementation no later than 30 June 2022.
New UAE Cybercrimes Law to come into force in January 2022
The Federal Decree Law No. 34 of 2021, effective from January 2, 2022, covers new areas of the internet, bringing major amendments to the Federal Law 5 of 2012 on Combatting Cybercrimes.
The new law comes as part of the largest set of legislative reforms announced for next 50 years.
The new law criminalises publishing and sharing fake news, rumours and misleading or inaccurate information that cause panic on online platforms. Violators will face at least one year in prison and a minimum Dh100,000 fine. The penalty increases to two years in prison and a minimum Dh200,000 fine if the crime was committed during pandemics, emergencies and crises.
A provision to address specifically the instances of creating false electronic emails, website or accounts with the aim of impersonating an individual or a corporate entity, has also been introduced.
Corporate Tax Introduced in the UAE – Effective from 1 June 2023
The Finance Ministry in the UAE announced introduction of Corporate Income Tax on 31 January 2022.
With the introduction of Corporate Tax, UAE reaffirmed its commitment as a member of OECD Inclusive Framework on Base Erosion and Profit Shifting (“BEPS), for meeting international standards for tax transparency and preventing harmful tax practices.
The UAE Corporate Tax regime will become effective from financial years starting on or after 1 June 2023 and will be applicable to all UAE businesses / Commercial activities except for extraction of natural resources (who are already subject to Tax).
The new regime implies a standard statutory tax rate of 9% when taxable profits exceeds AED 375,000 . It gives complete relief of tax to business which taxable income less than AED 375,000 in order to support small businesses and start-ups. There is an indication that there will be a different tax rate for large multinationals that meet the criteria under ‘Pillar Two’ of the OECD Base Erosion and Profit Shifting project (i.e. that have consolidated global revenues above EUR 750m).
Individuals would be subject to Corporate Tax only if they have ongoing and regular business in UAE. Employment income, income from real estate, income from savings, investment returns and other income earned by individuals in their personal capacity that is not attributable to a UAE trade or business shall not be subject to corporate tax.