UAE: Any person, firm can apply for reduction, exemption from tax penalty

Dubai - Penalties may be reduced or exempted if the person can prove an acceptable reason for the violation.

The UAE’s Federal Tax Authority (FTA) on Wednesday said any person or group in the country has the right to apply to reduce or seek exemption from the penalty imposed for violating the country’s tax laws.

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But those individuals and companies seeking reduction or exemption will have to provide a good reason which is acceptable to the FTA — as well as evidence that justifies the existence of the excuse and the violation that led to the imposition of administrative penalties.

On May 6, the UAE reduced old penalties on value-added tax and excise tax to help firms and individuals better cope with the impact of the Covid-19 pandemic.

According to Cabinet Decision No. 49 of 2021, tax payers who currently have penalties pending can see those reduced by 70 per cent, provided they settle them before December 31, 2021.

Going forward, late payment penalties will be reduced to four per cent per month, a substantial reduction from one per cent per day while an overall cap stays at 300 per cent.

waheedabbas@khaleejtimes.com