Facing penalties from the Federal Tax Authority (FTA) in the UAE? Looking to waive your fines or set up an installment plan to ease the burden? If so, you’ve come to the right place.
FTA in the UAE imposes penalties on businesses that do not comply with laws or are involved in severe violations. However, the FTA may waive these penalties if the business provides a valid reason for the violation.
For that purpose, new procedures were established, according to the Federal Decree-Law No. 28 of 2021 and Cabinet Decree No. 105 of 2021, for requesting waivers or reductions of administrative penalties. Effective from 1 March 2022, these rules allow businesses to apply for a reduction or exemption, with each request reviewed individually by the FTA.
Managing the complexities of FTA penalties and fine reduction in the UAE can be challenging, but Now Consultant is here to ease the burden. Our team of expert tax penalty consultants specializes in helping businesses successfully apply for penalty waivers or set up manageable installment plans for easy payment of fines.
What Is a Penalty Waiver In the UAE
A penalty waiver application in the UAE allows taxpayers to request the FTA to reduce or remove a penalty based on a valid reason for the violation. The process is guided by Cabinet Decree No. 105, which permits taxpayers to waive their fines or pay administrative fines in installments under specific conditions.
Waiver applications can be submitted by:
- The taxpayers themselves.
- An authorized tax advisor or agent like us.
- A legal representative.
The registered tax agents can the waiver request. So do not take the risk of getting stuck in the second problem along with the tax penalties; hire a trustworthy tax firm such as Now Consultant to ease your tax burden in the UAE.
Eligibility Criteria For Administrative Penalties Installments:
To qualify for paying administrative penalties in installments, the following conditions must be met:
- First, the request must only apply to penalties that have not yet been paid.
- The total amount of these penalties should be at least AED 50,000.
- The penalties in question should not be involved in any ongoing disputes with the Tax Disputes Resolution Committee (TDRC) or Federal Courts, except if they are under reconsideration.
- Lastly, the tax owed for the period related to the penalties must be fully settled before applying for installments.
Eligibility Criteria For Administrative Penalties Waivers
The Federal Tax Authority (FTA) has established a system allowing taxpayers to request administrative penalty waivers. To qualify, the following criteria must be met:
- The waiver cannot be related to tax evasion.
- The request must be submitted within the FTA’s specified timeframe.
Conditions for Penalty Waiver Requests
Taxable individuals can request a penalty waiver under these circumstances:
- Death or Illness: If the taxpayer is an individual or business owner or if a key employee of a tax registrant dies, becomes ill, or resigns.
- Government Restrictions: If the taxpayer is subject to restrictions or preventive measures by UAE government authorities.
- System Failures: If there is a failure in the FTA’s systems or in payment and communication systems affecting a group of people.
- Legal Restrictions: If the taxpayer or business owner faces legal restrictions on their freedom.
- Payment Issues: If taxes were paid through another registered taxpayer’s account.
- Insolvency or Bankruptcy: Penalties may be waived if they were paid before insolvency or bankruptcy, and it is clear that these situations were not used to evade taxes.
How To Apply For Tax Penalty Waiver In Dubai, UAE:
To properly submit an installment or waiver request, the following is the step-by-step procedure given below:
1. Prepare The Request
What to Include: Gather essential information like your tax identification number, the amounts of any penalties, and the specific reasons for requesting an installment plan or waiver. This information will form the foundation of your request. The experts at Now Consultant help you gather all the required information to proceed with the FTA.
2. File An Undertaking
In the second step, you need to file an undertaking for installment or waiver request:
For Installment Requests: You need to file an official statement (undertaking) promising that you will pay the penalties according to the payment plan accepted by the tax authority.
For Waiver Requests: Your undertaking should state that you will fix the problem that caused the penalties and ensure it does not happen again in the future.
3. Adhere To The Undertaking
Following through on what you have committed to in the undertaking is significant. If you break the promises made in your undertaking, your request for an installment plan or waiver will be automatically canceled. Experts at Now Consultant help you to follow the rules of undertaking for successfully completing your waiver or installment plan.
4. One Request Rule
Limitations: You are allowed to submit only one request for each specific penalty. This means you can not apply for another installment plan or waiver for the same penalty after your first request. So, you need to hire registered tax advisors such as Now Consultant for error-free application submission for your penalty to the FTA.
5. Addressing Missed Payments
Valid Excuse: If you miss a payment but have a valid reason, you can request a new payment plan. The tax authority may consider your justification and allow you to reschedule the payments.
No Excuse: If you fail to adhere to the payment plan without a valid excuse, the tax authority may take action to collect the penalties, which could include more serious legal or financial consequences.
By carefully following these steps, you can ensure your request is handled efficiently and stands the best chance of approval. However, the most suitable option is to hire professionals at Now Consultant for an authentic approach.
Timelines:
FTA Review: The Federal Tax Authority (FTA) has 40 business days to assess the request for compliance. If everything is in order, the request is forwarded to the Committee.
Committee Decision: The Committee then has 60 business days to make a decision and must notify the applicant within 10 days. If no decision is made, the request is automatically rejected.
Committee’s Role:
The Committee is responsible for:
Setting Deadlines: Establishing time limits for submitting waiver requests.
Payment Plans: Outlining procedures and schedules for installment payments.
Penalty Waivers: Determining the percentage of penalties to be waived.
Guarantees: Requesting guarantees for processing installment requests.
Failure To Pay
If a taxpayer does not pay their installments on time, the Committee can adjust the payment plan or cancel it entirely. This means that sticking to the payment schedule is important, as missing payments could lead to losing the installment plan option altogether.
Refund of Penalty:
The Committee has the authority to decide on refunds for penalties paid in the last five years. Suppose a penalty waiver is approved after the penalty has already been paid. In that case, the amount will either be credited back to the taxpayer’s account with the Federal Tax Authority (FTA) or refunded in cash if the taxpayer is no longer registered.
How Can We Help You?
Applying for a tax penalty waiver in Dubai can be challenging due to issues like incomplete documentation, missing eligibility criteria, or delays. As expert tax consultants, we can simplify this process for you and help secure a waiver or reduction. Let us handle the complexities while you focus on your business.
Now Consultant is a registered tax firm in the UAE, offering services to waive the penalty amount and convert it into installments. Our team of qualified professionals is dedicated to helping businesses and individuals prepare and submit their applications for a penalty waiver.
From gathering the necessary information to getting the final approval from the FTA committee, our experts help you at every step to make sure you get tax relief and work to overturn any penalties in compliance with the rules and regulations set by the FTA.
