$14,000 fine awaits business turning blind eye to UAE excise tax
In principle, before October 1, UAE businesses had never had any kind of tax to worry about filing, collecting or reporting, and as such one would assume gaffes to occur. Practically, that’s wishful thinking.
Following the UAE Cabinet announcing on October 2, 2017, fines for breaching what’s called the ‘sin tax’ law will be given to local businesses, small, medium and large should they plead ignorance of the rules or unfamiliarity with them.
It’s why tax advisory firms are likely gearing up for the business ahead with KPMG, Deloitte and Price Waterhouse Coopers offering alerts and tax updates via their sites geared to the UAE market.
Fines to be expected
This one you can swallow. “A fine must be no less than AED500 ($136) and no more than triple the value of the tax on the transaction in question, stated the Cabinet decision.
Accounting practices that fail to keep records of their stocks consistent with Federal Tax directives will incur a AED10,000 ($2,725) fine for first time offenders, and AED15,000 ($4,087) if the same occurs the second time around.
Retailers will be liable for an AED15,000 penalty if the products they have on display do not reflect the excise tax with them.
The failure of the taxable business person to submit the data, records and documents related to the excise tax in Arabic to the Authority when requested, or failure of same to submit a registration application within the timeframe specified in the law incurs another AED20,000 ($5,450).
Now to lower the boom even more, failure to comply with the conditions and procedures related to transfer the excise goods from a designated zone to another designated zone gets violators a AED50,000 ($13,623) fine or 50 per cent of the tax, whichever is higher, paid on the goods that resulted in the violation.
The same fine applies for failure by the taxable person to provide the Authority with price lists for the Excise Goods produced, imported or sold thereby.
Shaikh Hamdan Bin Rashid Al Maktoum, Deputy Ruler of Dubai and UAE Minister of Finance said: “These decisions bring an added layer of transparency to the Authority’s relationship with its customers and this, in turn, provides extra incentive for stakeholders and all concerned parties to abide by tax regulations.”
“All customers can refer to the official Directory of Services Fees to know what is required of them to be in compliance with tax procedures,” Shaikh Hamdan added.