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Penalties For Tax Procedures in UAE

Federal Law -Tax Procedures

This Law aims to achieve the following:

1. The regulation of the mutual rights and obligations between the Authority and the Taxpayer and any other Person dealing with the Authority;
2. The regulation of the common procedures and rules applicable to all Tax Laws in the State.

Any Person conducting any Business must keep Accounting Records and Commercial Books of his Business and any Tax related information as determined by Tax Law and maintain the same according to the controls laid down by the Executive Regulations to this Law.

Tax Evasion Penalties

1. Without prejudice to any more severe penalty provided for under any other law, a sentence of detention and/or fine not exceeding five times the amount of evaded Tax shall be imposed on:
a. a Taxable Person who deliberately fails to pay any Payable Tax or Administrative Penalties;
b. a Taxable Person who deliberately understates the actual value of his Business or fails to consolidate his related Business with the intent of remaining below the required registration threshold;
c. a Person who imposes and collects amounts from his clients claiming them to be Taxes without being registered;
d. a Person who deliberately provides false information and data and incorrect documents to the Authority;
e. a Person who deliberately conceals or destroys documents or other material that he is required to maintain and provide to the Authority;
f. a Person who deliberately steals, misuses or causes the destruction of documents or other materials that are in the possession of the Authority;
g. a Person who prevents or hinders the Authority’s employees from performing their duties; and
h. a Person who deliberately decreases the Payable Tax by Tax Evasion or conspiring to evade Taxes.

2. The imposition of a penalty under the provisions of this Law or any other Law shall not exempt any Person from the liability to pay any Payable Taxes or Administrative Penalties under the provisions of this Law or any Tax Law.

3. The competent court shall impose Tax Evasion penalties against any Person who is proven to have been directly involved or instrumental in Tax Evasion pursuant to Federal Law No. 3 of 1987 referred to.

4. Without prejudice to subsection 2 of this Article, any Person who is proven to have been directly or instrumentally involved in Tax Evasion pursuant to subsection 3 of this Article shall be jointly and severally liable with the Person whom he has assisted, to pay the Payable Tax and Administrative Penalties pursuant to this Law or any other Tax Law.

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