What is the penalty for not keeping tax records?

Article 24 – Administrative Penalties Assessment10 1. The Authority shall issue an Administrative Penalties Assessment for the Person and notify him of the Administrative Penalties Assessment within (5) five Business Days for any of the following violations: a. The Person conducting Business or having an obligation under this Decree-Law or the Tax Law failing to keep the required records and other information specified in this Decree-Law and the Tax Law. b. The Person conducting Business or having an obligation under this Decree-Law or the Tax Law failing to submit the data, records and documents related to Tax in Arabic to the Authority when requested. c. The Taxable Person failing to submit a Tax Registration application within the timeframe specified in the Tax Law. d. The Registrant failing to submit a deregistration application within the timeframe specified in the Tax Law. e. The Registrant failing to inform the Authority of any case that requires the amendment of the information pertaining to his Tax record kept by the Authority. f. The Legal Representative failing to inform the Authority of his appointment within the specified timeframe, in which case the penalties will be due from the Legal Representative’s own funds. g. The Legal Representative failing to file a Tax Return within the specified timeframe, in which case the penalties will be due from the Legal 10 Article Amended as per Federal Decree-Law No. 17 of 2024. Federal Decree-Law No. 28 of 2022 and its amendments – As published by the Ministry of Finance 14 Representative’s own funds. h. The Registrant failing to submit the Tax Return within the timeframe specified in the Tax Law. i. The Taxable Person failing to settle the Payable Tax within the timeframe specified in the Tax Law. j. The Registrant submitting an incorrect Tax Return. k. The Taxable Person or the Taxpayer submits a Voluntary Disclosure in relation to errors in the Tax Return or the Tax Assessment or refund application pursuant to Clauses 1 and 2 of Article 10 of this Decree-Law. l. The Taxable Person or the Taxpayer fails to submit a Voluntary Disclosure in relation to errors in the Tax Return or the Tax Assessment or refund application pursuant to Clauses 1 and 2 of Article 10 of this Decree-Law before being notified that he will be subject to a Tax Audit. m. The Person subject to Tax Audit, his Tax Agent or Legal Representative failing to offer facilitation to the Tax Auditor in violation of the provisions of Article 20 of this Decree-Law, in which case the penalties will be due from the Person’s, Tax Agent’s or Legal Representative’s own funds as applicable. n. The Registrant failing to account for Tax on behalf of another Person when the registered Taxable Person is obligated to do so under the Tax Law. o. Any other violation specified under the Tax Law or a Cabinet decision. 2. The Executive Regulation shall specify the information and data that must be included in the Administrative Penalties Assessment. 3. The Cabinet shall issue a decision that specifies the Administrative Penalties for each of the violations listed in Clause 1 of this Article in respect of this Decree-Law, the Tax Law or any other violation specified under a Cabinet decision. 4. The amount of any Administrative Penalty shall not exceed two times the amount of Tax in respect of which the Administrative Penalties Assessment was issued. 5. The imposition of any Administrative Penalty pursuant to the provisions of this Decree-Law or any other law shall not exempt any Person from the responsibility of settling the Payable Tax in accordance with the provisions of this Decree-Law or the Tax Law. Federal Decree-Law No. 28 of 2022 and its amendments – As published by the Ministry of Finance 15 Chapter Five – Penalties, Procedures and Measures

Article (14) The Making and Keeping of Records and Books of Account 1. Persons Obliged to Pay Tax are required to keep regular and independent accounting books and records to record the movement of Excise Goods, as well as supporting documents, and to maintain them in an organized and logical manner, making it possible for the Tax Authority to monitor the accuracy of tax calculation and payment. 2. Accounting books and records and supporting documents shall be retained for a period of five years from the end of the fiscal year during which that operation took place, unless they are required to be retained for a longer period under any of the laws in force in each Member State.

Article 56 – Record Keeping 1. Notwithstanding the provisions of the Tax Procedures Law, a Taxable Person shall maintain all records and documents for a period of (7) seven years following the end of the Tax Period to which they relate that: a. Support the information to be provided in a Tax Return or in any other document to be filed with the Authority. b. Enable the Taxable Person’s Taxable Income to be readily ascertained by the Authority. 2. Notwithstanding the provisions of the Tax Procedures Law, an Exempt Person shall maintain all records that enable the Exempt Person’s status to be readily ascertained by the Authority for a period of (7) seven years following the end of the Tax Period to which they relate.

  records of fixed assets; inventory records and statements (including quantities and values) at the end of any relevant tax period and all records of stock-counts related to inventory statements. The above requirements exist in order to demonstrate a sufficient audit trail such that a VAT amount can be traced from a source document, for example an invoice, through to the final tax return. 13.2.2. For how long should records be kept? In general, a taxable person must keep the required records for a minimum of 5 years after the end of the tax period to which they relate. Before the expiration of the 5-year term, the FTA may, however, require the person to retain the records for a further period not exceeding 4 years, in the following cases:    if the taxable person’s tax obligations are subject to a dispute with the FTA; if the person is subject to an ongoing tax audit; or if the FTA has given a notice to the person that it intends to conduct a tax audit before the expiry of the 5-year record retention period. Where the taxable person owns real estate, the taxable person should retain the required records relating to the real estate for a period of 15 years after the end of the tax period to which they relate. 13.3. Archiving and retrieval requirements Businesses do not have to keep their records in any specific way or format. However, they must be kept in a way which will allow the FTA to easily check the information which has been used to complete the tax return. Furthermore, regardless of whichever way a taxable person chooses to store their archived records, they need to be made readily available in a legible format on request by the FTA. Examples of the manner in which records can be archived include:    Retention of the original documents (e.g. in paper or electronic form); Creating photocopies of the original documents; and Other ways of recording and preserving the information or data contained in the original document. A taxable person is not required to keep records on their premises. However, as pointed out above, the records must be readily available when requested by the FTA. For example, where the FTA attends your business premises to conduct a tax audit, businesses need to be able to provide the FTA with access to the relevant records in a timely and efficient manner. 52 VAT Guide | Taxable Person | VATG001