The New Tax Procedures Law, as outlined in Cabinet Decision No. (74) of 2023, establish transformation of tax procedures that will have a significant impact on the obligations and processes of taxpayers falling under the purview of the Federal Tax Authority (FTA). These changes are aimed at aligning Corporate Tax and VAT regulations, necessitating a detailed examination of how these reforms will influence taxpayer obligations.
Document Retention Requirements
One of the notable reforms include requirements for document retention. Taxpayers are obligated to maintain a comprehensive set of accounting records and commercial books, encompassing the meticulous preservation of essential documents such as correspondence, invoices, tax invoices, licenses, and various business agreements and contracts.
Expanding Record-Keeping
The scope of documents supporting entries in accounting records and commercial books has been expanded. Record-keeping now includes statements, inventory records, records of salaries and wages, as well as accounts related to profit and loss and the balance sheet. Specific items requiring meticulous accounting include balance sheet and profit and loss accounts, records of wages, and records of fixed assets.
Document Retention Timeframes
Taxpayers must adhere to specific record retention timeframes. For Taxable Persons, the mandated period is five years after the conclusion of the relevant Tax Period. For entities required to maintain records, the retention period is five years from the end of the financial year in which the document was created.
Additional Document Retention Requirements
In cases of disputes between a Person and the Authority regarding Tax obligations, an extended four-year period for document retention is stipulated, or until the dispute is resolved, whichever is later. During a Tax Audit, records must be retained for an additional four years. If the Authority notifies a Person of its intention to conduct a Tax Audit before the original retention period expires, an additional four-year period is imposed.
Special Provisions for Voluntary Disclosure
Taxable Persons submitting a Voluntary Disclosure in the fifth year following the end of the relevant Tax Period must observe an added one-year retention period from the date of submission. The Legal Representative must also ensure that the books and records of the represented Person are maintained for one year following the conclusion of their legal representation.
Obligations of Licensing Authorities
Government entities responsible for granting business licenses must promptly notify the Authority within twenty Business Days from the issuance or renewal of a license, following a prescribed process.
Language Flexibility in Tax Documentation
A significant advancement allows the Federal Tax Authority to accept all data, including tax returns records, information, and related documents, in Arabic or English. However, if documents are submitted in English, the FTA retains the discretion to request translation into Arabic within a defined timeframe.
Registration Data Amendment
The New Executive Regulation introduces an increased mandate for registrants to notify the FTA of changes in their business data within twenty Business Days, providing a more comprehensive mechanism for keeping the FTA informed about changes in business operations.
Facilitating Reconciliation for Tax Evasion Offenses
Regulatory updates introduce a reconciliation process for individuals or entities involved in tax evasion. Submission of a reconciliation application before criminal proceedings, with the condition of resolving outstanding tax payments and administrative penalties, aims to encourage cooperation and resolution through reconciliation rather than litigation.
Deregistration for Non-Compliance
Entities with a VAT Tax Registration Number (TRN) must promptly notify the FTA within twenty business days of significant changes affecting their eligibility to maintain a VAT TRN. Failure to do so results in the suspension of the Tax Registration Number, signaling non-compliance.
Enhanced Role of Tax Agents
Regulatory changes extend to the role of tax agents, now categorized separately for VAT and Corporate tax. Each category has specified training and qualifying examinations, emphasizing diverse responsibilities and expertise. Both English and Arabic proficiency are accepted, with tax agents subject to continuing professional development (CPD) requirements.
Seeking Professional Guidance
While this overview highlights major changes, it is essential to note that it doesn’t cover all modifications. Thus, taxpayers are highly recommended to seek professional guidance to navigate these nuanced changes effectively and conduct a thorough assessment of their specific operations.
Choose the Services of Tax Consultants in UAE
These updates to the UAE tax framework signify a significant move towards greater standardization, transparency, and compliance. The changes aim to simplify tax procedures, facilitating compliance for businesses and individuals while providing a framework for resolving tax-related offenses through reconciliation. To fully grasp the implications, taxpayers are advised to seek professional guidance and assess how these changes impact their operations, fostering a more conducive and efficient tax environment for both taxpayers. Thus, contact us our corporate tax consultant at Corporate Tax UAE today and we shall be glad to assist you.
