Grace Period Announced by UAE’s Federal Tax Authority: Update Tax Records Without Penalties

UAE FTA grace period is now in effect, allowing businesses the opportunity to update their tax records without penalties. This important update from the Federal Tax Authority offers businesses from January 1, 2024, to March 31, 2025, to comply without fines. The UAE’s Federal Tax Authority (FTA) has issued a Public Clarification providing businesses with a significant opportunity to update their tax records without incurring administrative penalties. This initiative aims to support businesses in maintaining accurate tax records, fostering compliance, and promoting transparency within the UAE’s tax system.

Here’s a comprehensive overview of what this means for UAE businesses and how to take advantage of this grace period.

Key Details of the FTA’s Grace Period for Tax Record Updates

The FTA’s recent announcement offers businesses a chance to correct and update any changes in their tax information, with a temporary waiver on administrative penalties. This grace period spans from January 1, 2024, to March 31, 2025. During this time, registrants can bring their tax records up-to-date without facing fines or penalties that typically apply for delayed updates.

What Information Needs Updating?

Businesses that have experienced any of the following changes are encouraged to utilize this grace period to update their records with the FTA:

• Business Information: This includes changes to the name, address, or email address associated with the business.
• Trade License Activities: Any updates to the types of activities listed under the business’s trade license should be reported.
• Legal Entity Structure: If the business structure, such as a partnership agreement or Articles of Association, has been altered, this needs to be updated.
• Nature of Business: Any shift in the primary activities or nature of the business should be recorded with the FTA.
• Business Address: If the primary location from which the business operates has changed, it should be reported to ensure accurate FTA records.

Automatic Penalty Reversal for Past Non-Compliance

For businesses that incurred administrative penalties due to non-compliance with tax record updates between January 1, 2024, and the beginning of the grace period, there’s good news. The FTA has announced an automatic reversal of these penalties. This means that businesses don’t need to contact the FTA to request a penalty reversal; it will be handled automatically, relieving businesses of any prior penalties related to outdated records.

Benefits of Leveraging the Grace Period

This grace period reflects the FTA’s commitment to supporting businesses and promoting compliance with UAE tax regulations. By encouraging timely updates to tax records, the FTA seeks to improve data accuracy, which benefits both businesses and regulators in ensuring that tax procedures are fair and transparent.

For businesses, taking advantage of this grace period has multiple benefits:

• Avoid Future Penalties: Once the grace period ends, businesses that fail to update tax records within 20 business days of any changes will be liable for administrative penalties.
• Promote Compliance and Accuracy: Accurate tax records help streamline future filings and reduce the risk of discrepancies or audits.
• Ease of Process: With no penalties to worry about, businesses can focus on updating their records without financial concerns.

What Happens After the Grace Period?

Starting April 1, 2025, the FTA will resume regular enforcement of penalties for delayed tax record updates. Under the standard rules, registrants are required to notify the FTA of any changes within 20 business days to remain compliant. Failing to do so may result in administrative fines, which can range from AED 1,000 for a single violation to AED 10,000 for repeated non-compliance within 24 months.

How NAM Accountants Can Assist with Compliance

At NAM Accountants, we are committed to helping businesses navigate the UAE’s tax and compliance landscape. With this new grace period, our team is ready to support businesses in reviewing, updating, and aligning their tax records with FTA standards. Our experienced professionals can assist you with:

• Record Verification: We ensure that all necessary updates are identified and promptly submitted.
• Documentation Support: Our team can guide you on the required documentation and submit updates on your behalf, simplifying the process.
• Ongoing Compliance Monitoring: After the grace period ends, we provide continuous support to keep your business compliant, minimizing the risk of future penalties.

Take Action Now

The FTA’s grace period represents a rare chance for businesses to bring their tax records up-to-date without the threat of administrative fines. Businesses are encouraged to review their tax information and make any necessary updates as soon as possible.

For assistance with tax record updates or to discuss compliance needs, contact NAM Accountants today. Our team is here to help you remain compliant and make the most of this beneficial initiative.

About NAM Accountants

Founded in 2009, NAM Accountants offers comprehensive financial advisory services, including tax compliance, business setup, PRO services, and VAT consulting. With a seasoned team of experts in UAE regulations and a commitment to client success, NAM Accountants provides solutions that foster business growth and regulatory compliance.

Contact Us:
Phone: +971-54-998-1913
Email: [email protected]