UAE announces grace period to help businesses avoid tax fines

The UAE has introduced a grace period for taxpayers to help businesses avoid fines and penalties for delayed tax record updates.

The Federal Tax Authority (FTA) announced this new initiative, granting a grace period for tax registrants who may have fallen behind on updating their records, covering the period from January 1, 2024, to March 31, 2025.

This grace period offers businesses the chance to make necessary updates to their tax records without incurring administrative penalties typically associated with failing to notify the FTA of any changes requiring updates.

Key aspects of grace period

The UAE Cabinet issued a decision to provide this grace period for tax registrants facing administrative penalties for not updating their tax record information in time.

If penalties were imposed and subsequently paid between January 1, 2024, and the end of the grace period, those penalties will be refunded according to the Penalty Refund Procedures outlined in Cabinet Decision No. (105) of 2021 on paying, waiving, or refunding administrative penalties.

The FTA clarified that the initiative encourages tax registrants to update their information. Under Cabinet Decision No. (74) of 2023 on the Executive Regulation of Federal Decree-Law No. (28) of 2022 on Tax Procedures, registered taxpayers are required to notify the authority within 20 working days of any changes in their details, such as the name, address, email, commercial activity, legal form, partnership agreements, or business location.

Supporting tax compliance

Director General of the FTA Khalid Ali Al Bustani emphasized the significance of the Cabinet Decision, which is designed to support taxpayers and foster collaboration to maintain compliance with UAE tax regulations.

Al Bustani stated that the decision aligns with the UAE’s commitment to implementing a tax system according to global best practices.

This system promotes transparency, economic growth, and a flexible legislative environment to encourage self-compliance among businesses.

“This Cabinet Decision provides an opportunity for registrants who have missed obligations to update their tax records during the specified grace period,” Al Bustani said. “This allows them to avoid administrative penalties associated with failing to inform the FTA of cases requiring tax record updates.”

Al Bustani urged registered taxpayers to take advantage of this grace period, highlighting its benefits for reducing the tax burden on businesses, fostering economic growth, encouraging timely compliance, and strengthening the UAE’s business competitiveness.

The FTA has also issued a clarification on this grace period, which is available through the Public Clarifications service on the FTA’s website. This service provides taxpayers with detailed explanations to help simplify tax compliance, ensuring businesses remain informed on technical tax matters and legislative updates.