UAE Federal Tax Authority (FTA) Introduces Grace Period for Tax Record Updates

The UAE Federal Tax Authority (FTA) is pleased to announce a Decision aimed at supporting the regular conduct of business toward its obligation for compliance in the most effective ways. It allows grace by giving a period wherein the registrants, by necessity, have failed to make updates in their tax record obligations. 

The FTA has started the initiative to motivate the registrants to update their tax records related information which is held by the FTA. By updating the information, no administrative penalties will be levied on the registrants. The FTA has provided that the information must be updated during the grace period from 1 January 2024 until 31 March 2025. 

Why is This Grace Period Important?

The updating of tax records can sometimes be tricky, and errors do occur. The FTA realizes this and would not want to penalize a business without giving them an opportunity to rectify their mistakes. This grace period is all about giving an equal opportunity to all in respect of getting their tax records in order.

How Does It Work?

Business firms may update their tax records within the grace period. The entries must be complete and accurate. 

The best thing? They won’t suffer administrative penalties regarding the mistakes prior to the grace period. A perfect way to get this year rolling in the right direction!

Steps to Update Your Tax Records

1. Record Verification- There needs to be a proper checking of all your tax records and documents. Ensure that each mentioned detail is correct and updated.
2. Finding out mistakes – Go through your tax information to find whether any important information is missed out and not wrongly mentioned.
3. Do corrections: If any missing information or error is identified, correct and update the same.
4. Submit the updated information- Once you rectify the missing information or errors, submit the updated tax record to the FTA via their online portal. This is such a rapid, and easy process.

 

Benefits of Updating Tax Records

• Avoid Penalty: The most direct benefit in updating your records is you can avoid administrative penalties. Giving wrong information or omitting some important information carries penalties by FTA.

• Cancellation of Previous Penalties: if an administrative penalty was imposed on registrants during the period from 1 st January 2024 until 31st March of the grace period for failing to update the information in their tax records held by the FTA, such penalty will be reversed.

• Improved Compliance: When your records are updated, that means your business is aligned with the guidelines and rules mentioned by the FTA.

• Enhanced Communication: Keeping the record with all required information ensures getting important notices and updates by the FTA on time.

• Accurate Tax Obligation: Accurate records help in precisely working out your tax liabilities and avoiding future disputes accordingly.

What information needs to be Updated

According to the FTA, “Registrants” are required to inform the FTA of any event that might require the amendment of information related to their tax record kept by the FTA, including the following changes: 

• Name, address and email address.
• Trade license Activities
• Legal entity type, partnership agreement for unincorporated partnerships and articles of association or its equivalent.
• Nature of the business of the registrant.
• The address from which any business is conducted by the registrant.

Failure to inform the FTA of such changes within 20 business days from occurrence is a tax violation and is subject to administrative penalties.

What Happens After the Grace Period?

After the grace period, which will end on March 31, 2025, businesses will be required to keep their tax records accurate. If after this any mistake or incomplete information is found, then penalties can be imposed. Therefore, do not miss this opportunity now, and make sure your records are correct and updated.

Tips for Keeping Tax Records Up-to-Date

Following are five key tips for maintaining your updated tax record in the UAE:

• Record Reviews: Records are to be periodically checked for their accuracy and shall be updated as per the review.

• Digital Software: Avail yourself of accounting software for effective recording of business transactions and continue record keeping in a very organized way.

• Organized Documentation: Arrange the invoices, receipts, and contracts date-wise and by type.
• Bank Reconciliation: Reconcile bank statements with financial records on a periodic basis.

• Professional Help: Take the help of a tax consultant on requirements for advice and assistance professionally to keep compliant.

How FAR Consulting Middle East Can Assist You

We understand that keeping tax records updated can be difficult. We make this process easy for you. Our team of experienced tax professionals will help you review and update your tax records, that too during the grace period.

At FAR Consulting Middle East we offer the following tax-related services to our valued clients:

• Tax Consultation: We arrange tax consultants to advise on managing and updating your tax records.
• Record Review: We review your records for error tracing or omission of data.
• Update Support: Assistance of our team in updating your tax records.
• Compliance Support: We will make sure that your business stays compliant with FTA-made regulations.

An excellent opportunity to update your tax records without penalties is provided. Contact Farahat & Co. today and get your tax records in perfect order!

Final Thoughts

The UAE Federal Tax Authority (FTA) is offering a golden opportunity for business people to come up with updated tax records, without worry about fines. It is worth noting that the period between January 1, 2024, and March 31, 2025, should be used to ensure compliance of the business and update the records accurately.

At FAR Consulting Middle East it’s the right approach by seeking professional assistance to update your records with the FTA. Never wait for the last minute. Begin the process of updating your tax records today and enjoy your peace of mind. Know that your business is moving in the right direction.