The Federal Tax Authority announced a grace period for registered entities on 6th November 2024. This facility is provided for those who have not updated the details of their tax registration, w.e.f. March 2025. The grace period includes all FTA-registered businesses which, if they have not updated registration or tax information by January 1, 2024, shall be liable to update to the set deadline of March 2025. For these businesses, the grace period would extend to amending changes such as address, email, business activity, or business legal form without any fine. To those businesses which for this timeframe had fines applied and which have these penalties paid, therefore the FTA has stipulated that it is able to return those monies based on the instructions set out in this response to Cabinet Resolution No. (105) for the year 2021 on the procedures for the settlement, write-off, and refund of statutory fines.
It will greatly help these businesses which are often on the move, in updating records and allow businesses to promptly rectify errors that they have made without fear of incurring a fine, thereby, improving their compliance. In this case, by providing the time for such changes, the FTA hopes to improve compliance with regulatory regimes, reduce the incidence of their violations in the future, and foster timely tax compliance across the board.
Principal Demands For Complying Businesses
The FTA reminds businesses that they are required to notify the authority within 20 days of any factual change that concerns the information registered at the authority. Cabinet Decision No. 74 of 2023 issued on 23rd March concerning Executive Regulations of Federal Decree-Law No. 28/2022, the taxpayers registered with the FTA are required to inform the authority about any changes that occur in their relevant particulars. Such particulars that should be updated in the description of the business include the following:
- Changes in the name of the business or the registered legal entity
- Changes in the location, telephone number, or the main email address
- Alteration in the activity included in the commercial license
- Change of legal form or the form of ownership
- Amendment of partnership terms in the Joint Ventures
- Modification in the articles of association or change of business activities
The above-described requirements are aimed at ensuring the accuracy and transparency of the records that are kept in the FTA system so that chances of discomforting events requiring administrative and other types of penalties in the future are minimized.
Director General’s Statement on the Initiative:-
His Excellency Khalid Ali Al Bustani, Director General of the FTA, emphasized the relevance of this decision in giving a hand to the businesses in enabling them to pay their taxes. Al Bustani observed that this moratorium is an expression of the UAE government to create an ideal and dynamic taxation system aimed at increasing tax compliance and transparency. “The grace period is in consonance with the overall vision to the leaders in constructing a tax system that is flexible, self-compliant, and works towards enabling the economy of the UAE.” He stated that solutions such as this should be used in accordance with the country’s existing laws. Al Bustani also added that this initiative is one of many mechanisms the FTA had so as to impact the businesses positively and assist them in steering clear off penalties whilst being compliant with tax laws. He called for businesses to grab this chance and use it to clean, for once, their tax books, so that they can comply with requirements and avoid sanctions in the future.
How Businesses Can Benefit from the Grace Period:-
The grace period allows numerous business benefits especially to those across the UAE, especially in terms of administrative constraints.
- Avoid Penalties: Businesses can, by taking this opportunity, avoid penalties by making amendments within the allocation time.
- Access Refunds for Paid Penalties: Businesses that are late in updating their records because of the grace period offered to record keeping are eligible for reimbursement upon payment of fines.
- Strengthen Compliance Practices: It is also suggested that this be the period to put in place better compliance procedures in order to avoid such infractions in the future.
- Reduce Tax Burden: In ensuring that their tax books are up to date, businesses are bound to be active in their core activities and contribute to the economy positively uninterrupted by tax issues.
- Enhance Business Competitiveness: Tax compliance is a vital aspect and if done accordingly will help the business have a good standing while operating in the UAE and hence gain more market brand awareness.
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Public Clarification and Ongoing Awareness Efforts
Clarification on the grace period as issued by the FTA has also been brought to the public’s attention thanks to the efforts of the FTA in promoting general understanding among taxpayers. This varies from giving details requirements pertinent to tax record updates and steps for updating such tax records to additional details on how to retrieve penalties for record updates if necessary. The FTA through the Public Clarifications service seeks to enhance the capacity of businesses to comply with the requirements and curtail some taxation challenges that are common.
The FTA’s website (https://tax.gov.ae/en/) also contains new provisions on various aspects of technical tax issues. Through easy and comprehensible notice, FTA intends to enable business owners to be the first who gets the latest news and manage their tax liabilities’ risks in advance.
Encouraging Businesses to Work
The FTA considers this period as an intervention measure that will enable businesses to regard tax compliance as an ordinary requirement that does not unnecessarily interfere with their operations. Such a course of action conforms with the strategic visions of the UAE in as far as promoting economic development and upholding standards of regulation under the premise of positioning the nation as a strong global business center. It is also part of the strategy of transforming the market’s, and businesses’ expectations to make them more realistic in terms of being able to implement a tax system that is conducive for businesses.
Conclusively, the FTA granting a grace period to such businesses to update their tax records under this notice is a good chance for them to amend their tax details without repercussions, emphasizing the UAE’s position of open governance in its regulatory aspect which is also pro-business. It is recommended that all businesses use this time to check their records and make sure that they are in accordance with tax laws so that they can further enhance their role in the UAE economy and demonstrate themselves as law-abiding members of the business community. As for further assistance, the FTA’s guidelines should be followed as those websites contain a number of materials that support businesses and assist them during the fulfillment of tax duties
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