FTA Grants Grace Period to Update Records and Waive Penalties
Grace Period Announced for Updating Tax Records in the UAE
The UAE’s Federal Tax Authority (FTA) has recently introduced a significant tax update: a grace period for businesses to update their tax records without facing penalties. This is a move that aims to support businesses in maintaining accurate tax records while avoiding costly administrative fines. Here’s what you need to know about this new grace period and how it could benefit your business.
Key Takeaways
- What: Grace period to update tax records without penalties.
- When: The period starts on January 1, 2024, and ends on March 31, 2025.
- Who: Any registrant with the FTA who needs to amend their tax records.
Why This Matters
Typically, businesses in the UAE are required to inform the FTA within 20 business days if there are any changes to critical information, like company name, address, trade license details, or legal entity type. Failing to report such changes within this timeframe can lead to penalties. The penalties could be AED 5,000 for the first occurrence, and even higher if repeated.
The new grace period provides a valuable window for businesses to correct and update their information without facing these fines.
What Can Be Updated
During this grace period, businesses can make various updates to their tax records, including:
- Changes in company name, address, or contact details.
- Updates to trade license activities.
- Modifications to the legal entity type or business structure.
- Adjustments to primary business activity or location.
How the Grace Period Works
From January 1, 2024, until March 31, 2025, any updates made to your tax records will not trigger administrative penalties, even if they are changes that should have been reported previously. This means you can bring your tax records fully up to date without fear of fines during this period.
Reversal of Previously Imposed Fines
If a business was already fined for failing to update its tax records within the required timeframe, there’s some good news. Any penalties imposed between January 1, 2024, and the effective date of the grace period will be automatically reversed by the FTA. If you’ve already paid these fines, the amount will be credited back to your tax account.
Steps for Businesses
- Review your current tax records with the FTA.
- Identify any updates that need to be made.
- Submit updates to the FTA before March 31, 2025, to avoid penalties.
There’s no need to contact the FTA specifically to request a fine reversal. Any penalties applied during the grace period will be adjusted automatically.
Take advantage of this window to review and correct any outdated information with the FTA, and stay compliant while avoiding fines.
For further details, consult your tax advisor or contact the FTA directly to make sure you’re fully aligned with this new update.
