The UAE Federal Tax Authority (FTA) has introduced a Corporate Tax Grace Period, providing businesses with a much-needed opportunity to rectify tax-related issues without facing penalties. This initiative, effective from January 1, 2024, to March 31, 2025, allows businesses to address a range of compliance challenges, including late filings, incorrect information, and missed deadlines.

Key Benefits of the Grace Period:

• Penalty-Free Corrections: Businesses can now rectify tax filing errors, such as incorrect income declarations, deductions, or credits, without incurring penalties. This provides relief for companies that may have made unintentional mistakes or faced unforeseen circumstances.
• Refund of Paid Penalties: Businesses that have already paid penalties during the grace period for tax-related issues can now request a full refund. This is a significant benefit for companies that may have been facing financial strain due to unexpected tax liabilities.
• Opportunity to Update Records: The grace period allows businesses to update crucial information with the FTA, such as changes in ownership, address, business activities, or contact details. This ensures that the tax authority has accurate and up-to-date information, facilitating smooth tax administration and reducing the risk of future compliance issues.

How to Make the Most of the Grace Period:

1. Conduct a Comprehensive Review: Businesses should conduct a thorough review of their tax records, including past filings, to identify any potential errors or omissions. This review will help identify areas that require correction or updating.
2. File Necessary Amendments: Once identified, businesses should file the necessary amendments or corrections to their tax returns. This may involve submitting revised tax returns, providing additional documentation, or updating their tax registration information.
3. Request Penalty Refunds: Businesses that have paid penalties during the grace period should submit a formal request for a refund to the FTA. This request should include supporting documentation, such as proof of payment and details of the specific penalty.
4. Ensure Future Compliance: To avoid future tax-related issues, businesses should establish robust internal controls and procedures to ensure timely and accurate tax filings. This may involve implementing a tax calendar, assigning dedicated personnel to tax compliance, and staying updated on the latest tax regulations and guidelines.

By taking advantage of this grace period, businesses can rectify past mistakes, avoid future penalties, and strengthen their tax compliance posture. This initiative underscores the UAE’s commitment to fostering a supportive business environment while ensuring fair taxation.

Click here to know about our legal services

Click here to know about our corporate banking services