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How to Utilize the Grace Period for Tax Record Updates

grace period
icon Nov 07, 2024 | icon VAT

How to Utilize the Grace Period for Tax Record Updates

 If you are VAT-registered and any circumstances arise that affect the tax records you provided to the FTA during your registration, you are required to update your records and notify the FTA within 20 business days of the occurrence.    Failure to notify the FTA of such changes within the specified timeframe is considered a tax violation and will lead to the imposition of administrative penalties.    Registrants must inform the FTA of any event that could require changes to the information in their tax records held by the FTA. This includes, the following changes: 
  • Name, address, and email address. 
  • Changes to trade license activities. 
  • Modification of the legal entity type, partnership agreement for unincorporated partnerships, or articles of association (or their equivalent). 
  • Changes in the nature of the registrant’s business. 
  • The address from which the registrant conducts business. 
  Failing to notify the FTA of such changes within 20 business days of their occurrence constitutes a tax violation and may result in administrative penalties.    Grace period  To encourage registrants to update their tax records with the FTA, no administrative penalties will be imposed if the information is updated during the grace period, which runs from 1 January 2024 to 31 March 2025.   Additionally, if an administrative penalty was imposed on registrants between 1 January 2024 and the start of the grace period for failing to update their tax records with the FTA, that penalty will be reversed.  If registrants have already paid the administrative penalty, the reversed penalty amount will be credited back to their tax accounts. Registrants do not need to contact the FTA to request the reversal, as this process will be carried out automatically.   

Examples 

The following are examples of instances covered by this Public Clarification: 
  • Failing to notify the FTA within the required timeframe about the opening of a new branch and not uploading the new trade license for that branch. 
  • Failing to notify the FTA within the required timeframe that the business has moved to a new address. 
  • Failure of a VAT/Excise Tax registered person to update their records within the required timeframe before attempting to register for Corporate Tax. 
  • Registering for Corporate Tax with incorrect details and failing to update the information within the required timeframe. 
 

Administrative penalties by the Cabinet decision: 

  1. The Authority will issue an administrative penalty assessment for the registrant and notify them within five business days if they fail to inform the Authority of any event that requires an amendment to the information in their tax records held by the Authority. 
  2. If the registrant fails to inform the Authority of any circumstance that requires an amendment to the information in their tax records, the penalties are as follows:
    • AED 5,000 for the first violation. 

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