January 17 2022

Cabinet Introduces Administrative Penalties Instalments and Waivers Rules

Source: IBFD Tax Research Platform News

The UAE Cabinet has issued Resolution 105/2021 (the decision) setting up rules and mechanisms for requests regarding the payment in instalments, waiver and refund of administrative penalties.

The request for payment in instalments, waiver or refund of administrative penalties should be submitted to a committee (the Committee) formed by decision of the Chairman of the Federal Tax Authority (FTA).

Conditions for submitting requests for payment in instalments or waiver of administrative penalties

Payment in instalments of administrative penalties

Taxpayers may request payment in instalments of unpaid and undisputed administrative penalties of at least AED 50,000.

Waiver of administrative penalties

The Committee may approve the waiver of administrative penalties if the following conditions are met:

  • the violation in respect of which the administrative penalties were imposed should not be related to a crime of tax evasion;
  • the request must be submitted within the period specified by the Committee; and
  • the taxpayer's request should be related to one of the following cases:
    • illness or death of a registered natural person or the owner of a sole proprietorship, when the illness or the death was a direct cause of non-implementation of the tax obligation;
    • existence of precautionary or preventive measures imposed by the government, which directly caused the unfulfilment of the tax obligations;
    • a defect in the FTA's systems, payment systems, or telecommunications services, which directly prevent the taxpayer from the fulfilment of the tax obligations;
    • when the taxpayer pays the tax due through another account registered for tax purposes with the FTA;
    • if a taxpayer is declared insolvent or bankrupt, and the tax amounts due from him is paid prior to the date of the bankruptcy or insolvency declaration, unless the purpose of registering the bankruptcy or insolvency is to evade the payment of such administrative penalties; and
    • any other cases accepted by the Committee.

Procedures for submitting requests for payment in instalments or waiver of administrative penalties

The requests for payment in instalments or waiver of administrative penalties shall be submitted to the FTA through the forms prepared for this purpose. The request must include the following documents and data:

  • name of the person, including the email and mailing address;
  • tax registration number (if any);
  • the amount of administrative penalties and violations related to the request;
  • the date of imposing the administrative penalties, subject to the request;
  • reasons for applying;
  • an undertaking from the person to pay the required payment according to the administrative penalties instalments plan approved by the Committee, if the request is related to the administrative penalties instalments plan;
  • an undertaking from the person that he corrected his violation and to not repeat the violation, if the request is related to the waiver of administrative penalties; and
  • any other documents or data required by the Committee.

A person may not submit more than one request for payment in instalments or be exempted from the same administrative penalties under study.

The Cabinet decision was issued on 28 December 2021, in accordance with Federal Decree-Law No. 7 of 2017 as amended on tax procedures law. The decision shall enter into force on 1 March 2022.