FTA speeds up inspection, uncovers tax violations worth Dhs71.48 million

The Federal Tax Authority (FTA) has intensified its inspection campaigns in the local markets in collaboration with the Ministry of Economy, the Federal Customs Authority and other competent authorities to ensure compliance with tax legislation and procedures, as well as protecting consumers from trafficked products that do not meet quality specifications approved within the UAE.

In a press release issued on Tuesday, the FTA announced that its teams conducted 2,226 field inspections in local markets during the second quarter of this year, through 23 campaigns that were conducted throughout the seven emirates in collaboration with relevant government entities. During these visits, 655 tax violations valued at Dhs71.48 million were detected.

FTA Director-General, Khalid Ali Al Bustani, said that specialised teams, in cooperation with the concerned authorities, conduct inspection campaigns throughout the year to protect consumers and combat tax evasion. During Ramadan, the authority intensified its inspections campaigns in collaboration with the competent authorities to enhance its control in markets, as many violations were discovered and appropriate legal measures were taken.


Picture used for illustrative purpose only.

Al Bustani confirmed that protecting consumers and their rights, as well as preserving the country’s rights, are at the top of FTA priorities. “The FTA is keen to implement the best global practices regarding the application of tax legislation and procedures, which have clearly defined mutual obligations between the authority and taxpayers, through accurate control mechanisms that provide the highest standards of governance and transparency using cutting-edge technologies and smart programmes to enhance the effectiveness and efficiency of inspections.” Sara Al Habshi, Director of the FTA’s Tax Compliance and Enforcement Department, revealed that the field inspections conducted during the second quarter of 2021 detected 2.86 million unregistered tobacco products that did not bear the Digital Tax Stamp (DTS), in addition to 202,000 other Excise Goods, including carbonated beverages, energy drinks, and sweetened drinks.

Al Habshi stressed that all inspection campaigns carried out by the FTA are conducted using sophisticated, cutting-edge control mechanisms to prevent the sale, circulation, and stockpiling of products that have not fulfilled their Excise or Value Added Tax (VAT) obligations. One of these mechanisms is the placement of DTSs, which are registered in the FTA database on tobacco products. Each DTS contains data that can be read with a special device to make sure that all taxes due on the products have been paid.

The Federal Tax Authority has recently called on tax registrants in the UAE to benefit from the penalty redetermination scheme introduced by Cabinet Decision No. 49 of 2021 on Amending Some Provisions of Cabinet Decision No. 40 of 2017 on the Administrative Penalties for Violation of Tax Laws in the UAE, which will be effective from 28th June 2021.

The FTA stressed the three conditions that must be met in order for tax registrants to benefit from the re-determination of unpaid administrative penalties imposed prior to 28 June 2021, to equal 30 per cent of the total unpaid penalties. The first condition is that the administrative penalty must have been imposed under Cabinet Decision No. 40 of 2017 before 28th June 2021, and some or all of it remains outstanding. The second condition is that the tax registrant settles all payable tax by 31st December, 2021, so that there is no outstanding tax payable by the end of 2021.

Finally, the third condition requires tax registrants to settle 30 per cent of any administrative penalties payable and unsettled by 28th June, 2021, on or before 31st December 2021.

Khalid Ali Al Bustani said: “In order to ensure a smooth, flexible, and accurate implementation of the decision and to provide additional facilities for registrants to benefit from the decision, the Authority will be launching a dashboard for penalty redetermination, which can be accessed from the main dashboard of the registrant on the FTA’s E-Services portal, which enables registrants to check various data, including “Total Unpaid Administrative Penalties imposed before 28 June 2021”; “Total Unpaid Administrative Penalties reversed after 28 June 2021” -an amount that may be related to penalties imposed before 28 June 2021, but the decision to reverse was taken after 28 June 2021; “Net Unpaid Administrative Penalties imposed before 28 June 2021” - The difference between the Total Unpaid Administrative Penalties imposed before 28 June 2021 and Total Unpaid Administrative Penalties reversed after 28 June 2021, which is subject to redetermination if conditions are met; “Total Administrative Penalties payable as per Cabinet Decision No. 49 of 2021” - The 30 per cent share of Total Unpaid Administrative Penalties imposed before 28 June 2021, that needs to be settled before 31 December 2021 in order to benefit from the redetermination; “Total Administrative Penalties paid after 28 June 2021” - The amount of administrative penalties imposed before 28 June 2021 and considered to have been settled after 28 June 2021; “Outstanding Administrative Penalties payables as per Cabinet Decision No. 49 of 2021”.