Noncompliance to the UAE corporate tax law and standards accrues hefty fines upon taxable persons, thus it is imperative for companies in the UAE to outsource the services of top tax consultants Dubai to stay compliant and to avert incurring penalties.
Penalties for noncompliance to UAE corporate tax
As per the Corporate Tax UAE, failure to register and file corporate accrues to hefty fines and penalties upon taxable persons [1]. Late payment of Corporate Tax results in a penalty amounting to AED 1,000 per month. The maximum penalty that can be imposed is capped at AED 10,000 or 50% of the total taxes owed (whichever is higher) [1]. There are also other measures in place such as freezing bank accounts and assets, travel bans, and criminal proceedings if Corporate Tax dues are not paid on time.
To register for Corporate Tax in the UAE, businesses need to submit a duly completed Corporate Tax registration form along with all supporting documents and financial reports. Depending on the size and structure of your business, you may want to consider outsourcing Corporate Tax services to a professional tax consultant or an accountant. A qualified expert will be able to guide you through the registration process and ensure that all requirements are fulfilled correctly. Taxable persons are ideally advised to avoid any noncompliance to ensure that corporate tax registration and payment is up-to-date.
Corporate Tax Fines for Late Registration
Corporate Tax in UAE must be registered for businesses to fulfil their tax obligations and remain compliant with the law. Failure to comply accrues hefty fines and penalties upon companies.
Businesses may also incur additional fines and penalties for late filing or non-filing of Corporate Tax returns. For example, businesses that fail to file Corporate Tax returns on time are subject to an additional corporate tax penalty of AED 500 per month per outstanding return up to a maximum of AED 10,000 [1] (roughly USD 2,720). Additionally, businesses may also be subject to extra late payment fees and interests.
Penalty for Late Payment of Corporate Tax
Non-payment of tax is a serious offence in the United Arab Emirates (UAE). Any taxable corporation or individual that fails to register for corporate tax and pay the applicable taxes before their due date incurs hefty fines. The tax office may impose fines and penalties, which will be imposed as a percentage of unpaid tax.
Tax consultants in UAE can help with tax registration and filing tax returns. They can also provide professional advice on how to avoid penalties for tax delinquency [2] by making sure tax payments are made in a timely manner. Businesses should always seek professional tax advice from an accredited tax consultant to ensure that their taxes are paid correctly and on time to avert penalties or fines.
The UAE Federal Tax Authority take severe action against tax defaulters, which includes freezing of accounts or other assets owned by the corporation, or even the cancellation of tax registration. Therefore, it is important to make tax payments within the time period specified by UAE tax authorities in order to avoid any tax related fines or penalties.
Key Sanctions Under the Penalties Law for LLCs
The new UAE tax law outlines a set of sanctions for LLCs that fails to register for or pay their corporate tax. These sanctions include fines, imprisonment, and travel bans. Fines range from AED 10,000 for first-time tax offenses to AED 100,000 for repeated tax violations [2]. In extreme cases of tax avoidance or evasion, the board members may be held criminally liable and face imprisonment of up to 2 years in addition to a fine of up to AED 500,000 [2]. Further, a tax violator may be subject to a 12-month travel ban imposed by the tax authorities.
To ensure compliance with tax laws and to minimize the risk of incurring penalties, it is highly recommended for companies to hire experienced tax consultants who are familiar with UAE tax regulations and can guide them through their tax filing process. Tax consultants can also provide advice and assistance to help companies avoid tax penalties in the future and ensure their tax affairs are in order at all times. Thus, contact us today and we shall be happy to assist you!
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