Can tax penalties be waived or reduced?

This is not an official Translation: Controls and Procedures for Paying Administrative Penalties by Instalments, and Waiving and Refunding Administrative Penalties Cabinet Decision No. 105 of 2021 Issue Date: 28 December 2021 The Cabinet has decided: - Having reviewed the Constitution, - Federal Decree-Law No. 13 of 2016 on the Establishment of the Federal Tax Authority, and its amendments, - Federal Law No. 7 of 2017 on Tax Procedures, and its amendments, - Federal Decree-Law No. 7 of 2017 on Excise Tax, - Federal Decree-Law No. 8 of 2017 on Value Added Tax, - Cabinet Resolution No. 40 of 2017 on Administrative Penalties for Violations of Tax Laws in the UAE, and its amendments, and - Pursuant to the presentation of the Minister of Finance, and approval of the Cabinet,

Article 50 – Controls for Paying by Instalment, Waiving, or Refunding of Administrative Penalties 1. If the Authority imposes or collects an Administrative Penalty from any Person for violating the provisions of this Decree-Law or the Tax Law, the Committee provided for in Clause 2 of this Article may, according to the presentation of the Director General, issue a decision approving the payment by instalments of the penalty amount or totally or partially waiving or refunding it, pursuant to the controls and procedures issued in a decision by Cabinet according to a suggestion by the Minister. 2. The Chairman of the Board of the Authority shall issue a decision forming the Committee provided for in Clause 1 of this Article, to be chaired by him or his deputy, and the membership of two Board members. The decision issued forming the Committee shall set out its bylaws and the manner of holding its meetings. Chapter Three – Miscellaneous Provisions

Article 1 – Definitions In the application of the provisions of this Decision, the following words and expressions shall have the meanings assigned against each, unless the context requires otherwise: : United Arab Emirates. State : Ministry of Finance. Ministry : Federal Tax Authority. Authority : A committee created by a decision of the Chairman of Committee the Authority’s board of directors in accordance with Cabinet Decision No. 105 of 2021 – Issue Date: 28 December 2021 - Unofficial Translation 1 Tax Procedures Law : Tax Law Administrative Penalties : : Person : Category of Persons : Settlement of Administrative Penalties by instalments Waiver of Administrative Penalties : Refund of Administrative Penalties : Request : Person Entitled to Pay by Instalments : : Article 46 of the Federal Law No. 7 of 2017 on Tax Procedures and its amendments. Federal Law No. 7 of 2017 on Tax Procedures, and its amendments. Any Federal law under which a Federal tax is imposed. Monetary amounts imposed on a Person by the Authority for breaching the provisions of the Tax Procedures Law or the Tax Law. A natural or legal person on whom an administrative penalty has been imposed. Group of persons affected by the same administrative penalties, and the circumstances that led to the imposition of administrative penalties on them are similar. Settlement of Administrative Penalties in specified periodic payments as determined by the Committee and based on the controls and procedures stipulated in this Decision. Exemption of a person or a category of persons in whole or in part from administrative penalties, in accordance with a percentage or periods determined by the Committee, and subject to fulfilment of the controls and procedures stipulated in this Decision (whether or not such penalties have been settled). Refund of administrative penalties paid by a person or a category of persons, without requesting proof of a specific justification, for equality between taxable persons, as determined by the Committee, and after verification of the fulfilment of the controls and procedures stipulated in this Decision. What a person submits seeking Settlement of Administrative Penalties by instalments or Waiver of Administrative Penalties. The Applicant for whom the Committee issued a decision approving the Settlement of Administrative Penalties by instalments.

but, الشركات الذي يقوم في البداية بالتسجيل كخاضع subsequently, has its application to be exempt ولكن تمت الموافقة الحقا ً على طلب مقدم،للضريبة registers as a Taxable Person .إلعفائه من الضريبة approved. Where a Person within the scope of this initiative في حال استوفى الشخص المشمول بهذه المبادرة شروط meets the conditions to benefit from the waiver أي تقديم اإلقرار الضريبي خالل سبعة أشهر من،اإلعفاء i.e. it files the Tax Return within seven months تاريخ انتهاء الفترة الضريبية األولى أو تقديم التصريح from the end of the first Tax Period, or files an السنوي خالل سبعة أشهر من تاريخ انتهاء السنة المالية annual declaration within seven months from the ستقوم الهيئة باتخاذ اإلجراءات، بحسب األحوال،األولى end of the first Financial Year, as applicable, the :اآلتية FTA will undertake the following actions: 1. Where the Late Registration Penalty has not ، في حال لم يكن قد تمّ سداد غرامة التأخر في التسجيل.1 yet been paid, it will be waived and, will no لن تظهر الغرامة على أنها مستحقة الدفع في حساب longer appear as payable on the Person’s ضريبة الشركات الخاصّ بالشخص على منصة إمارات .تاكس EmaraTax Corporate Tax account. 2. Where the Late Registration Penalty has ّ تتم، في حال تمّ سداد غرامة التأخر في التسجيل بالفعل.2 already been paid, the amount of AED 10,000 درهم إماراتي10,000 إضافة مبلغ الغرامة البالغ shall automatically be credited to the Person’s تلقائيا ً إلى حساب الشخص لضريبة الشركات على .منصة إمارات تاكس EmaraTax Corporate Tax account. 3. Where the Person has submitted a request to في حال تقدّم الشخص بطلب إلى الهيئة إلعادة النظر في.3 the FTA for reconsideration in respect of the يعتبر طلب إعادة النظر،غرامة التأخر في التسجيل Late Registration Penalty, such request shall . نظرا ً إلعفائه من الغرامة بموجب هذه المبادرة،ى ً مُ لغ be considered null and void, as the Late Registration Penalty will be waived under this initiative. 4. Where the Person has submitted a request to في حال تقدّم الشخص بطلب إلى الهيئة إلعادة النظر في.4 the FTA for reconsideration of the Late وكان طلب إعادة النظر قد،غرامة التأخر في التسجيل Registration Penalty, and the reconsideration أي ت ّم اإلعفاء من الغرامة،ً تمّ ت الموافقة عليه سابقا request has already been approved, i.e. the لن يكون الشخص مؤهالً إلعفاء آخر بموجب،بالفعل penalty has already been waived, the Person .هذه المبادرة will not be eligible for a further waiver under this initiative. Where the amount of the Late Registration في حال تمّ ت إضافة مبلغ غرامة التأخر في التسجيل إلى Penalty is credited to the Person’s EmaraTax حساب الشخص لضريبة الشركات على منصة إمارات 4/15

Cabinet shall issue a Decision adopting an يصدر مجلس الوزراء قرارا ً باعتماد آلية بديلة،المختصة alternative mechanism of objection and appeal if لالعتراض والطعن إذا كان أطراف النزاع أيّ من الجهات the parties to the dispute are any of the Federal or .الحكومية االتحادية أو المحلية المحددة في ذلك القرار local Government entities specified in that Cabinet Decision. Pending the Cabinet Decision and its enforcement, تسري،وإلى حين صدور قرار مجلس الوزراء والعمل به the general objection and appeal rules will apply to األحكام العامّ ة في شأن اعتراضات وطعون الجهات objections and appeals of Federal and local .الحكومية االتحادية والمحلية المتعلقة بالمنازعات الضريبية Government entities concerning tax disputes. Mechanism of waiving, refunding, and payment of آلية اإلعفاء من الغرامات أو ردها أو سدادها على أقساط Penalties as instalments Penalties may be levied where a person commits غير،5قد تفرض الغرامات في حال ارتكب الشخص مخالفة an offence.5 There may, however, be أنه قد تكون هناك ظروف خارج إرادة الشخص قد يلزم circumstances beyond the person’s control which .النظر فيها may need to be considered. As per the Tax Procedures Law amendment, the تم تعديل،وبموجب تعديل قانون اإلجراءات الضريبية FTA’s authority to waive Penalties was modified. As ونتيجة لهذا.صالحية الهيئة في اإلعفاء من الغرامات a result of the amendment, the previous تم إلغاء اللجنة السابقة التي تنظر في األعذار واألدلة،التعديل committee reviewing the excuses and evidences in .المقدمة في شأن طلبات التخفيض واإلعفاء من الغرامات respect to applications to reduce or waive Penalties no longer exists. A new committee with the mandate to approve the وسيتم تشكيل لجنة جديدة تختص بالموافقة على تقسيط payment of Penalties in instalments, and waiving .ً واإلعفاء منها أو ردها كل ًيا أو جزئيا،الغرامات or refunding penalties in full or in part, will be formed. شرح تفصيلي Detailed discussion األطر الزمنية لالعتراض والطعن Timelines for objection and appeal 3 / 11