UAE Reduces Penalties on Excise Tax and VAT | Push Digits Chartered Accountants

UAE Reduces Penalties on Excise Tax and VAT

Home - Blog News - UAE Reduces Penalties on Excise Tax and VAT

UAE Reduces Penalties on Excise Tax and VAT

The UAE government has made the decision of reducing old penalties on excise tax and value-added tax (VAT) in order to help individuals and companies to better cope with the impact of the ongoing pandemic. As per the recently released Cabinet Decision No. 49 of 2021, entities who currently have pending penalties can see the amount of those penalties reduced to 30%, provided that entities settle the said penalties before 31 December 2021.

Going forward, late tax payment surcharge or penalty will be reduced to 4% per month, a significant reduction from 1% per day while the overall cap remains at 300%.

The changes made with regards to tax penalties will become applicable sixty days as from 28 April 2021.

Experts believe that technical provisions now determine that late tax payment surcharge/ penalty should be calculated 20 weekdays after the voluntary disclosure has been submitted. Further, the decision constitutes a very significant reduction in penalties and provides tax payers with an excellent opportunity to start afresh. Tax consultants all over the UAE are welcoming this move and believe that this is the best relief provided by the UAE government to the COVID-hit businesses operating within the UAE.

Many businesses within the UAE were subject to administrative penalties because of delay in submitting the due tax. The new provisions in connection with the administrative penalties are at par with the rest of the world. The most relieving and welcomed change is penalty of 4% of due tax per month compared to 1% of tax due per day of delay as per the old provisions.

 

Categories

Get a quote now!