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First – In the case that the Taxable Person makes a voluntary declaration about mistakes in the tax declaration or tax assessment or request for tax refund, the Federal Tax Authority shall apply against him the fines and penalties specified in Item No. (11) Of Table (1) of Cabinet Resolution No. 40 of 2017:

1. Fixed amount:

  • (3000) dirhams for the first time.
  • (5000) dirhams in case of repetition.

2. A relative penalty imposed on the difference amount that was not paid to the Authority as a result of a mistake, for the person / taxpayer in the following cases:

  • (50%) in the case that he made the voluntary declaration after being notified of the tax audit and the Authority started the tax audit procedures, or when asked to provide any information related to the tax audit, whichever is earlier.
  • (30%) if he submits the voluntary declaration after being notified of the tax audit, but before the authority begins the audit procedures.
  • (5%) if he submits the voluntary declaration before being notified of the tax audit, and before the authority begins the audit procedures.

Second – In the case that the taxable person does not pay the tax payable in the tax declaration that was submitted within the time limit specified in the tax law, he is obliged to pay the fine applied to the delay in payment in Clause No. (9) of Table No. (1) contained in Cabinet Resolution No. 40 For the year 2017 in which it was decided:

  • (2%) of the unpaid tax is due immediately upon delaying payment of the payable tax.
  • (4%) is due on the seventh day from the end of the period specified for payment on the amount of tax that has not been paid until the date.
  • (1%) a daily fine payable on any unpaid amount for a period exceeding one calendar month from the expiration date of the specified period for payment, with a maximum of (300%).

Third – As the legislator differentiated between the two cases in Clauses No. (9 and 11) of Table No. (1) Referred to above, so that each fine is applied in its case.

Fines may not be applied for late payment of the tax due in Item No. 9 in the case that the taxable person submits a voluntary declaration because the legislator has arranged a fine for the case of the voluntary declaration in Item No. (11) This is what was decided in the judgment issued by the Abu Dhabi Federal Court of First Instance in favor of our client where the judgment ruled to reject the cassation submitted by the Federal Tax Authority for the reasons we have explained above.