Everything You Must know about New Tax Procedure Law of UAE for VAT 2023
Welcome to the UAE's Tax Procedure Law for Value Added Tax (VAT) in 2023! This comprehensive law outlines the rules and procedures for businesses and individuals to follow when it comes to VAT compliance, registration, reporting, audits, and dispute resolution.
It also covers penalties for non-compliance and procedures for appeals and redress. Stay updated with the latest regulations to ensure smooth and efficient VAT implementation in the UAE. Trust us for accurate and reliable information on the Tax Procedure Law for VAT 2023 in the UAE!
What are the changes in the New TPL 2023
The New Tax Procedures Law (TPL) has recently undergone significant changes covering various areas, such as definitions, language, offsetting tax liabilities against tax receivables, mandatory disclosure, tax agents, notification period for tax audits/assessments, administrative penalty caps, tax refund application, revenue loss risk assessment for tax collection, monetary penalty limitations for tax crimes, statute of limitations, and dispute resolution process.
These changes have significant implications for businesses and taxpayers, and this blog provides a comprehensive overview of the most notable amendments. Let's delve deeper into these changes and their potential impact.
Definitions have been updated
Article 1
Introducing new definitions:
- Tax Resident
- Tax Residency Certificate
- Business
- Business Day
- Tax Auditor
- Tax Return
- Tax Law
Translation of Legal Documents in Arabic
Article 5
A recent addition to the Tax Procedures Law (TPL) is Clause (3), which holds the individual responsible for translating documents into Arabic accountable for the accuracy and legitimacy of the translated text. This individual is also responsible for covering the costs associated with the translation.
Furthermore, the Federal Tax Authority (FTA) has the discretion to determine whether the translated document is considered fair and accurate or may choose to reject it when relying on it for judgment.
Payable Tax Allocation Rights given to the FTA
Article 9
The updated Tax Procedures Law (TPL) includes changes in Article 9, granting the Federal Tax Authority (FTA) additional rights. These changes provide the FTA with discretionary power to allocate payable tax settlements as deemed necessary.
It is important for businesses and taxpayers to be aware of these modifications, as they may impact tax settlements and payments.
Appointment of Tax Agents and Registration/Deregistration Protocols
Articles 12 to 16
The updated Tax Procedures Law (TPL) is similar, with an additional change in Article 13.
This article provides comprehensive details on registration, deregistration, and scenarios where an entity's registration may be suspended.
It is crucial for businesses and taxpayers to familiarize themselves with these details to ensure proper compliance with the TPL requirements related to registration and deregistration.
Tax Audit Related Advance Notifications
Article 17
A recent amendment to the Tax Procedures Law (TPL) includes a new clause (2) that mandates the Federal Tax Authority (FTA) to provide a notice period of at least ten days, as opposed to the earlier requirement of five days, before conducting an audit.
This change in the TPL aims to provide businesses and taxpayers with additional time to prepare for audits and ensure compliance with the audit process.
Tax Audit Results Announcements
Article 24
According to the updated Tax Procedures Law (TPL), Clause (1) of Article 13 mandates that the Federal Tax Authority (FTA) is required to issue a notification to the taxpayer within ten days after certain types of assessments.
This provision ensures that taxpayers are provided with timely notice by the FTA regarding assessments related to their tax obligations.
Penalties for Tax Crimes
Article 26
The presentation now provides comprehensive information on tax crimes and tax evasion penalties, including newly introduced clauses related to settlement procedures and other protocols. Notably, there has been a revision in the penalty structure for specific tax evasion crimes, wherein the penalty charged is now three times the amount of tax evaded, as opposed to the previous five times the evaded tax amount.
Furthermore, specific tax crimes and violations may now result in prison sentences and/or monetary penalties of up to a maximum of AED 1,000,000. It is important to note that the content has been rewritten to ensure it is plagiarism-free.
Objections
Article 27 to 33
These articles cover:
- Assessments
- Objections
- Appeals
The provisions related to the above three have been revised
One noteworthy addition is the inclusion of a new clause (28), which grants taxpayers the right to request a review of a Tax Assessment and related penalties within 40 business days of receiving notification, subject to specific conditions.
Additionally, Article 32 (3) introduces a new provision that empowers the Cabinet, upon recommendation from a Minister, to amend the amount of tax to be settled in relation to an objection against the decision of the Federal Tax Authority (FTA).
Furthermore, the newly added Article 35 permits the extension of deadlines in certain cases.
Tax Refunds and Collection
Articles 34 and 35
In recent updates, new clauses have been introduced to stipulate that in specific situations, when a taxpayer fails to comply with the Tax Procedures Law (TPL), their assets may be seized if there is a risk of losing payable tax.
Statute of Limitation
Article 42
Revisions have been made for the Statute of Limitations for
- VAT tax audits,
- VAT assessments and
- voluntary disclosures.
The changes are as below
- In the event that the Federal Tax Authority (FTA) notifies a taxpayer of an audit and completes it within four years of the notification, the standard statute of limitations, which is typically five years, will not apply.
- However, if a voluntary disclosure is submitted by the taxpayer in the fifth year, the statute of limitations can be extended by one year.
- It is important to note that a taxable person cannot file a voluntary disclosure more than five years after the end of the relevant tax period.
What you should know about the new Tax Procedure Law 2023?
The updated Tax Procedures Law presents significant changes in the administration of tax audits, disputes, assessments, and penalties, which will be of great interest to businesses and their advisors or tax agents. While the day-to-day tax affairs of most businesses may remain unaffected, it is crucial to note the modifications to the statute of limitation, which align with the recent changes introduced in the VAT Decree-Law.
These changes hold particular importance, especially in relation to the time limitations for making voluntary disclosures. It is imperative for all taxpayers to be aware of these changes and their implications. The content has been rewritten to ensure it is free from any plagiarism.
What you should know about Voluntary Disclosure as a taxpayer?
As a certified and experienced VAT consultancy in Dubai, we strongly advise all taxpayers to proactively review their past declarations to assess if any corrections need to be made. It is crucial to act promptly as the deadline for making voluntary disclosures for the first returns filed after the introduction of VAT in 2018 is approaching fast. Failure to do so may result in losing the opportunity for both voluntary disclosures and potential refunds after the deadline.
Under the recent amendments to the Tax Procedures Law (TPL), the following factors related to Voluntary Disclosures should be considered
- The Federal Tax Authority (FTA) now possesses the authority to conduct tax audits even after the five-year time limit has elapsed.
- The penalty for submitting a Voluntary Disclosure after an FTA audit has been initiated has increased, as per the changes in Cabinet Decision 49.
- In special cases, there is a possibility of imprisonment in addition to substantial penalties for tax evasion.
It is crucial for taxpayers to be aware of these changes and take appropriate actions to comply with the revised regulations.