For all the business, the Prime Minister of the UAE, H.H. Sheikh Mohammed Bin Rashid Al Maktoum has issued Cabinet Decision No. 74 of 2023 on the Executive Regulation of Federal Decree-Law No. (28) of 2022 on Tax Procedures. This is repealed Cabinet Decision No. (36) of 2017 on the Executive Regulation of Federal Law No. (7) of 2017 on Tax Procedures and its amendments.
Many of the provisions of the previous Executive Regulation were maintained in the New Executive Regulation. The main amendments in the New Executive Regulation can be summarized as follows:
Definitions:
The definition of “Assets” was updated to include intangible assets such as trademarks, patents, goodwill, copyrights, etc.
Recordkeeping:
The record-keeping requirements that taxable persons should retain were extended to include correspondence, invoices, contracts, documents supporting calculations made in relation to the method of estimation, and documents with respect to transfer pricing documentation and party transactions.
Period of record-keeping:
The period for retention of documents was expanded as follows:
The retention period for real estate records is seven years from the end of the calendar in which such a document was created.
The general document retention period of 5 years will be extended by one year. This is extended by starting from the date of submission of voluntary disclosure in the 5th year from the end of the related tax period.
Legal representatives are required to continue to get the required records and books of the person they are representing for a period of one year. This period is one year from the date on which such legal representation ends.
Language
The Federal Tax Authority (FTA) might now accept tax return data, records, information, and any other documents related to tax to be submitted in Arabic or English.
Tax registration amendments
The instances in which a registrant is needed to inform the FTA. The change of information is extended to include instances of a change in the trade license activities, email address, legal entity type, and partnership agreement for unincorporated partnerships.
Deregistration
The Federal Tax Authority can now deregister a person who is required to deregister for a particular tax type but fails to submit a deregistration application.
Voluntary disclosure
The new executive regulation needed the person to submit a voluntary disclosure to rectify an error that has no effect on due tax. For example, a failure to report imported service in the tax return or omission/error of Emirate-level reporting.
Means of Notification
New means of notification were introduced where the FTA can now notify the person. FTA can notify the legal representative or tax agent by mobile text messages, smart applications, or the electronic systems of the FTA.
Tax Agents
The New executive Regulation introduces changes and a new concept for tax agents. Let’s discuss the new concept for tax agents:
Natural persons
The tax agent system is being updated. The updates are around experience required, specialism, education language, professional integrity, behavior, and procedures for tax agents.
Judicial persons
A new concept of a juridical person tax agent has been added to the tax legislation of the UAE. The New Executive Regulation sets the regulations for a juridical person to become a tax agent.
Listing and de-listing
Tax agents are needed to pay the relevant fees within 20 business days from the approval of the FTA of the registration.
Tax agents obligations
New obligations were introduced in the New Executive Regulation. Tax Agents are now needed to continue to meet their Continuing Professional Development (CPD) requirements as may be suggested by the FTA. Furthermore, they will keep documents, information, data, and records in respect of any person that is or was represented by the tax agents for the time period set out in the New Executive Regulations.
Tax audits
The FTA now needed to give a person at least 10 business days’ notice before conducting a tax audit. Moreover, the New Executive Regulation reduces the period for the FTA to respond to the request of a person. This is done to obtain or view documents, information, or data on which the FTA based an assessment of due tax to 10 business days.
The effective date of the New Executive Regulation
The New Executive Regulation will come into effect on 1 August 2023, except for the provisions relating to the conditions for registering juridical tax agents, which come into effect on 1 December 2023.
Conclusion
Taxable persons are needed to review the changes made to the New Executive Regulation to understand the impact on their business and activities to ensure implementation readiness by the effective date of 1 August 2023.
As we discussed above about Cabinet Decision No. 74 of 2023 on the Executive Regulation of Federal Decree-Law No. (28) of 2022 on Tax Procedures. This is repealed Cabinet Decision No. (36) of 2017 on the Executive Regulation of Federal Law No. (7) of 2017 on Tax Procedures and its amendments.
Many of the provisions of the previous Executive Regulation were maintained in the New Executive Regulation. All businesses have to take care of this new amendment as it will have a huge impact on their compliance. ebs can help you stay compliant with the regulations regulated by the Federal Tax Authority in the UAE. ebs has a team of professionals and experts who have the best understanding of these new amendments related to tax.
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