Introduction
Businesses in UAE must follow tax rules strictly. The government made changes in April 2021 about administrative penalties, which brought big relief for many companies. These changes did not just lower some penalties but also started a new way to review already given penalties. Now, businesses can get some penalties reduced if they follow the rules set by the FTA. Here, you will read main points about this redetermination process and learn how Mubarak Al Ketbi (MAK) Auditing can help you with it.
What Is Redetermination of Administrative Penalties?
Redetermination means to review and possibly lower old tax penalties. UAE’s Federal Tax Authority (FTA) wants more companies to follow tax rules, so they gave a way for companies to get penalties reduced if they meet all conditions. These rules apply to both VAT and Excise Tax in UAE.
Who Can Apply for Redetermination?
Not every business or person can apply. You must follow these points:
- The penalty must be for VAT or Excise Tax.
- The penalty must be imposed before 28 June 2021.
- You didn’t pay the full penalty by 28 June 2021.
- You must clear all your tax dues by 31 December 2021.
- You must pay at least 30% of your unpaid penalties by 31 December 2021.
If you follow all above points, you can apply for redetermination.
What Happens After Redetermination?
If FTA checks and sees you followed all rules, the penalty becomes 30% of what you still owed as of 28 June 2021.
The rest (70%) is cancelled, and you don’t need to pay it anymore. This is a big help for businesses with heavy penalty amounts.
Example Scenarios for Redetermination
Example 1:
A trading company called “XYZ” got a VAT penalty of AED 18,000 in February 2021. By 28 June 2021, they had paid AED 8,000, so AED 10,000 was left. They paid all tax dues and paid AED 3,000 (30% of AED 10,000) before 31 December 2021.
Because they followed all rules, FTA cancels the rest AED 7,000. “XYZ” doesn’t need to pay more.
Example 2:
If “XYZ” didn’t pay all their tax dues by 31 December 2021, even if they paid 30% of the penalty, they wouldn’t qualify for redetermination. They’d have to pay the full AED 7,000 penalty still left.
How Do You Apply for Redetermination?
- Check your e-services account with the FTA.
- The redetermination process link will be there.
- Follow the steps as shown on the FTA portal.
You should act early because missing a deadline will make you lose this relief.
Why Did UAE Bring These Changes?
UAE wants to help businesses stay strong, especially after tough times. Lowering penalties and letting people fix past mistakes gives everyone a fair chance. The government also wants all companies to follow the law closely and keep the tax system clean and clear.
Key Points to Remember
- You must have a penalty before 28 June 2021.
- You must not have paid the penalty in full by that date.
- You need to clear all tax dues by 31 December 2021.
- You must pay 30% of unpaid penalties by 31 December 2021.
- If you miss any step, you can’t get this relief.
What Can Mubarak Al Ketbi (MAK) Auditing Do for You?
When it comes to UAE tax rules and penalties, Mubarak Al Ketbi (MAK) Auditing always helps clients stay out of trouble. We give:
- Free first consultation for VAT & penalties.
- Clear guidance on applying for penalty redetermination.
- Step-by-step help during the whole process.
- Up-to-date knowledge about all FTA changes.
- Personal support for each business, big or small.
Let us help you take the bull by the horns—don’t let tax penalties bring your business down!
- For more information, visit our office:
Saraya Avenue Building – Office M-06, Block/A, Al Garhoud – Dubai – United Arab Emirates - Or contact/WhatsApp: +971 50 276 2132
