Grace Period to Update Information in Tax Records

As of 6 Nov 2024, the FTA (Federal Tax Authority) released a tax procedures public clarification announcing a new grace period for businesses registered for the purposes of corporate tax in UAE. This valuable grace period can be used to update information in a business’ tax records, avoiding potential administrative penalties. The new grace period extends from 1st January 2024 to 31st March 2025.

Tax Gian comprises qualified tax agents that provide top notch tax consultancy, tax assessment and tax advisory services in UAE. We provide expert guidance on the latest tax updates and changes in the tax framework. Our experts help you maintain accurate records in line with the FTA’s requirements.

Here is a detail of the new public clarification regarding the new grace period;

Key Highlights of the Cabinet Decision

Following is an analysis of Cabinet Decision implementing the new grace period;

• The registered businesses can apply to the FTA for rectification of information in the tax records provided to the FTA within 20 business days when needed.

• If a business has provided incorrect information and fails to apply for amendment within the prescribed period, this will be considered a violation of tax laws, and an equivalent administrative penalty will be imposed.

• If businesses successfully update their information in the FTA records within the grace period (1st January 2024 – 31st March 2025), no administrative penalty will be imposed.

• In cases where a penalty is already imposed on a business for not updating information on time before the cabinet decision implemented this grace period, such penalties will automatically be reversed.

• In cases where a penalty was imposed before the introduction of the grace period and the registered business already submitted the penalty amount, in such a case, the submitted amount will return to the tax account of the registered business.

• There is no need for businesses to contact the authority for the reversal of penalties; the FTA will automatically do it.

Types of Amendments in Information

The following types of changes can be done within the grace period;

• Corrections in email address, address, name, etc.

• Corrections in trade licence activities.

• Corrections regarding articles of association, partnership agreements, and legal entity types.

• Corrections regarding business nature.

• Corrections regarding the address from which any business is conducted by the registrant.

Examples

• If a business has registered for corporate tax but accidentally provided incorrect information and failed to amend the details within time, this grace period can be used for that purpose.

• If a registered business opens a new branch but fails to add its details in the tax records and also doesn’t show the trade licence of the new branch to the FTA, this grace period is for such a business.

• Businesses registered for excise tax or value-added tax before registering for corporate tax can use this grace period to update their records with FTA.

Best Practices for Businesses

• Businesses that fall under the scope of corporate tax must register for the coming tax period.

• Businesses should keep their information and records in the most accurate and precise form.

• Businesses should conduct regular audits to determine the accuracy of their financial records.

• Businesses should always be mindful of the due dates and important submissions.

• Businesses should keep tracking newer updates and take advantage of the incentives.

• Businesses should always keep in touch with expert tax consultants like Tax Gian to stay away from unforeseen circumstances.

Why Choose Tax Gian for Expert Tax Consultancy in UAE?

Tax Gian has a group of expert professionals who are highly knowledgeable and trained in their field. They can help you go seamlessly through any tax matter. They also help you in accurate record keeping so that you may not face any issues at the time of reporting. Our experts can take care of your whole tax process for you so that you can focus on business growth.