What is the Tax Procedures Law regarding tax in UAE
This Law aims to achieve the following:
- The regulation of the mutual rights and obligations between the Authority and the Taxpayer and any other Person dealing with the Authority;
- 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 – TAX IN UAE
1.In the absence of a violation of any severer penalty in the law
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 Taxable Person who deliberately fails to pay any Payable Tax or Administrative Penalties;
- 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;
- a Person who imposes and collects amounts from his clients claiming them to be Taxes without being registered;
- a Person who deliberately provides false information and data and incorrect documents to the Authority;
- a Person who deliberately conceals or destroys documents or other material that he is required to maintain and provide to the Authority;
- a Person who deliberately steals, misuses or causes the destruction of documents or other materials that are in the possession of the Authority;
- a Person who prevents or hinders the Authority’s employees from performing their duties; and
- a Person who deliberately decreases the Payable Tax by Tax Evasion or conspiring to evade Taxes.
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2-No tax exemption
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-Imposing penalties for direct or indirect tax evasion
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-Prosecution of assistants in tax evasion within this law
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.
About the tax system in the UAE
The United Arab Emirates’ tax system—or rather, lack of a tax system—is one of the primary factors that attracts expats to live there. Additionally, there is no system for corporate or inheritance taxes, nor do employees pay income taxes.
Additionally, there was no VAT until January 2018. This sales tax on goods and services was enacted at a modest rate of 5%. Additionally, certain goods like energy drinks and tobacco that the government deems to be hazardous to human health or the environment are subject to an excise tax.
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FAQ about tax in the UAE
1-Is UAE completely tax free?
There is no income tax in the UAE. There is no need for an income tax return because there is no applicable individual tax in the UAE. The same guidelines also apply to UAE citizens who work for themselves or as independent contractors.
2-Do foreigners pay tax in Dubai?
Due to its reputation as a tax-free city, Dubai attracts both foreign investors and residents looking for employment. The government of the United Arab Emirates does not levy income taxes on businesses or residents.
3-Do Dubai people pay taxes?
There is no income tax in the UAE. Corporate taxes are, however, levied against foreign banks and energy companies. Excise taxes are imposed on particular goods that are particularly harmful to the environment or to people.