UAE Announces Grace Period For Taxpayers

The Federal Tax Authority (FTA) announced a new decision to support businesses in efficiently meeting their tax obligations, offering a grace period for tax registrants who have fallen behind on updating their tax records for the period from January 1, 2024 until March 31, 2025.

The initiative allows violators to make the necessary adjustments and avoid incurring the administrative penalties associated with failure to inform the FTA of any cases that require modifying their tax records.

UAE tax deadline

The decision on granting a grace period for administrative penalties for registrants who have failed to update their tax record information was issued by the Cabinet.

It stipulates that in the event where penalties were imposed on registrants for failing to update their records in time, and the registrants in questions already paid said penalties in the period from  January 1, 2024 until the deadline set for the grace period, then the penalties will be refunded, in line with the Penalty Refund Procedures outlined in Cabinet Decision No. (105) of 2021 on Controls and Procedures for Paying Administrative Penalties by Instalments, and Waiving and Refunding Administrative Penalties.

The FTA noted that the initiative aims to encourage registrants to update their tax records, clarifying that, as per Cabinet Decision No. (74) of 2023 on the Executive Regulation of Federal Decree-Law No. (28) of 2022 on Tax Procedures, registered taxpayers must notify the authority, using its approved form and process, within 20 working days of any change in the information registered in the FTA systems.

This includes the name, address, email, activity listed in the commercial license, legal form, partnership agreement for joint ventures, and articles of association, along with any changes in the nature of the registrant’s business or address from which they conduct any of their business activities.

Khalid Ali Al Bustani, Director General of the FTA, stressed the importance of the Cabinet Decision, which provides additional facilities for taxpayers, and forms part of the FTA’s commitment to collaborating and coordinating with businesses to ensure their compliance with tax regulations and laws, while helping them avoid administrative penalties.

Al Bustani said: “The new Decision aligns with the wise leadership’s directives to implement the tax system according to the highest standards, designed to ensure transparency, maintain economic momentum, and establish an optimal, flexible legislative tax environment that promotes self-compliance and adapts to evolving circumstances through decisions tailored to current requirements.

“The Cabinet Decision provides an opportunity for registrants who have fallen behind on their obligations to update their tax records to do so during the specified grace period.

“This allows them to avoid administrative penalties associated with failure to notify the Federal Tax Authority of any cases that call for an update of their tax records submitted to the Authority’s system.”

The FTA Director General urged registered taxpayers to take advantage of the benefits the new Decision provides, which serve to:

• Reduce the tax burden on business sectors
• Enhance their contribution to national economic growth
• Encourage taxpayers to meet their obligations
• Boost the UAE’s competitiveness in the business sector

As part of its ongoing awareness efforts, the Federal Tax Authority issued a clarification on the grace period for updating tax record information, which can be accessed through the Public Clarifications service on the FTA official website.

This service aims to keep taxpayers informed about all technical matters related to taxes, offering detailed explanations to simplify these concepts and enable taxpayers to comply with tax legislation.