[World Tax News] UAE Unveils Penalties for Violating Corporate Tax Norms and More
- Blog|International Tax|
- 4 Min Read
- By Taxmann
- |
- Last Updated on 9 August, 2023
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Editorial Team – [2023] 153 taxmann.com 121 (Article)
World Tax News provides a weekly snippet of tax news from around the globe. Here is a glimpse of the tax happening in the world this week.
1. UAE unveils penalties for violation of Corporate Tax norms
The Ministry of Finance, UAE publishes a Cabinet Decision stating the administrative penalties for the Violations of the Taxation of Corporations and Businesses. The decision enlists a total of 13 types of violations. A few of the penalties are as follows:
| Sr. No. | Description of Violation | Penalty in AED |
| 1. | Failure of the Person conducting Business or Business Activity or having a Tax obligation under the Tax Procedures Law or the Corporate Tax Law to submit the data, records and documents related to Tax in Arabic to the Authority when requested. | 5,000 |
| 2. | Failure of the Legal Representative to file a Tax Return within the specified timeframes, in which case the penalties will be due from the Legal Representative’s own funds. |
This penalty shall be imposed from the day following the expiry date of the timeframe within which the Tax Return must be submitted, and on the same date monthly thereafter.
|
| 3. | Failure of the Taxable Person to settle the Payable Tax. |
a. 20 Business Days from the date of submission in the case of a Voluntary Disclosure. b. 20 Business Days from the date of receipt in the case of a Tax Assessment. |
| 4. | The Registrant submits an incorrect Tax Return. | 500, unless the Person corrects his Tax Return before the expiry of the deadline for the submission of the Tax Return according to the Corporate Tax Law. |
| 5. | Failure of a Person subject to Tax Audit, his Tax Agent or Legal Representative to offer facilitation to the Tax Auditor in violation of the provisions of Article (20) of the Tax Procedures Law, in which case the penalties will be due from the Person’s, Legal Representative’s or Tax Agent’s own funds, as applicable. | 20,000 |
Source: Cabinet Decision No. (75) of 2023
2. UAE publishes Decision on Executive Regulations on the Corporate Tax Law
The UAE Ministry of Finance has published Cabinet Decision No. 74 of 2023, which sets forth the executive regulations for the recently implemented Tax Procedures Law, Federal Decree-Law No. 28 of 2022.
The new Cabinet Decision stipulates the accounting records and commercial books to be maintained and the period and manner of record-keeping. It further includes updates related to the conditions and controls for registering as a Tax Agent, the procedures for de-listing a Tax Agent, including the requirement to communicate verbally and in writing in Arabic or English, and the rights and responsibilities of a Tax Agent.
Other key updates include procedures related to reconciliation in Tax Evasion crimes and the terms and conditions for such reconciliations. In addition, the new Cabinet Decision covers Tax payment and refund procedures and the obligations of a trustee in cases of bankruptcy.
Cabinet Decision No. (74) is effective as of 1 August 2023, except for Clause (2) of Article (12) outlining the conditions for juridical persons who wish to be listed in the Register of Tax Agents, which will be effective as of 1 December 2023.
Source: Announcement by Ministry of Finance
Cabinet Decision No. (74) of 2023
3. South Africa publishes Draft law for Advance Pricing Agreement
On 31 July 2023, the South African Revenue Service (SARS) released Draft Law stating the Advance Pricing Agreement (APA). The draft law prescribes various definitions, persons eligible to apply for such agreement, fees, manner of furnishing applications, compliance requirements, conditions where the agreement can be terminated, and other procedures & guidelines.
A prospective ‘applicant’ must request, together with proof of payment of the prescribed fee, in the prescribed form and manner, a pre-application consultation meeting. The key aspects of draft law is discussed below:
(a) Application for Advance Price Agreement
The Commissioner must arrange a pre-application consultation meeting with the prospective ‘applicant’ within 60 days of receipt of the request to discuss the scope of the ‘advance pricing agreement’, suitability and value of an ‘affected transaction, the most appropriate ‘transfer pricing method’ etc. After such consultation, the Commissioner must notify the prospective ‘applicant’ within 90 days of submitting an ‘advance pricing agreement application’.
Further, it is clarified that any amendment can be made to the application within 60 days of submitting the application.
The Commissioner must process the ‘advance pricing agreement application’ after accepting the application in a notice.
(b) Advance Pricing Agreement
Based on the information in the ‘advance pricing agreement application’, the Commissioner must prepare a preliminary ‘advance pricing agreement’ including the names, e-mail addresses, postal addresses, physical addresses, and countries of residence of the parties to the advance pricing agreement, etc.
(c) Duration of the Advance Pricing Agreement
The ‘advance pricing agreement’ will be applicable for up to a maximum of five consecutive years of assessment commencing on the day after the end of the year of assessment in which the associated ‘advance pricing agreement application’ is received by the Commissioner.
(d) Extension of the duration
The applicant that is a party to an ‘advance pricing agreement’ may request the Commissioner to extend the agreement not less than 60 days before the end of the last of the years of assessment of the agreement.
(e) Termination of the Advance Pricing Agreement
A party to an ‘advance pricing agreement’ may choose to terminate the agreement prospectively by informing the other parties to the agreement of the reasons for the termination. The Commissioner may prospectively terminate an ‘advance pricing agreement’ in certain circumstances.
Reference: Draft Law
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