UAE grants grace period, waives tax penalties from January 2024
The UAE's Federal Tax Authority (FTA) has set a grace period, for those delayed in updating their tax registration information, valid through March 2025,
This program is meant to enable companies satisfy their tax obligations more effectively. Under this new rule, taxpayers who have lagged in updating their records from January 1, 2024, to March 31, 2025, have extra time to make the required changes free from fines.
Moreover, were administrative fines previously paid between January 2024 and the end of the grace period, these could be reimbursed in line with the FTA's Penalty Refund Policies, as stated in Cabinet Decision No. (105) of 2021, These rules define how fines are handled in cases of compliance failures—that is, paid, returned, or waived.
The grace period also motivates companies to modify their tax information as necessary, therefore preventing any administrative penalties related to unreported changes in information, Cabinet Decision No. (74) of 2023 states registered taxpayers are obligated to notify the FTA within 20 working days of any changes to their registered details, Changes in name, address, email, listed business activity, legal form, partnership agreements, or articles of organization could all be required adjustments, Companies are also required to document any changes in commercial activity or a new address used for operations.
The significance of this decision, according to FTA Director General Khalid Ali Al Bustani, is in helping taxpayers satisfy regulatory criteria and minimize fines by means of minimum penalties. He underlined that the choice fits the aim of UAE government for a strong and open tax system. Al Bustani claims that the structure is meant to guarantee flexibility in meeting new criteria, encourage voluntary compliance, and support economic progress by means of adaptation.
"This Cabinet Decision gives businesses a chance to catch up on their obligations," he said, "allowing them to avoid penalties by updating their records during the grace period". In order to reduce the tax load on their activities, improve their position in national economic development, and increase the UAE's competitiveness in the corporate sector, he also urged registered companies to fully use this possibility.
The FTA is launching an information campaign on the advantages and terms of the grace period to help companies even more. By means of its Public Clarifications program on the official FTA website, taxpayers may get comprehensive guidelines and explanations on the grace period and other tax-related changes. This service seeks to clarify technical tax ideas, therefore enabling companies to better grasp and follow tax laws and regulations.
The FTA's latest ruling is a sensible move toward improving compliance and lightening the financial burden. The FTA is helping companies to match tax criteria by giving extra time to amend tax records without penalties and refunding some payments, This project also confirms UAE's will to provide a clear, open business environment. Before the grace period ends, the FTA advises all registered taxpayers to be proactive, make use of the tools at their disposal, and guarantee their tax records are updated.