In this blog, we unpack Part I of the UAE Tax Procedures framework, which outlines how businesses must operate under the corporate tax system. From self-assessment and voluntary disclosures to audits and penalties, this guide breaks down each aspect clearly and simply.
You’ll gain a solid understanding of:
- What compliance responsibilities you have as a taxpayer
- How voluntary disclosures work and when they apply
- The process of notifications, appointments of tax agents, and legal assessments
- How audits are conducted
- And, what kind of administrative penalties you could face for non-compliance
Preface
The UAE’s Corporate Tax Law is built on a self-assessment model—which means the onus is on businesses to calculate, report, and pay the right amount of tax. However, the system also includes oversight measures to ensure that taxpayers stick to the law.
The procedures for tax audits, assessments, penalties, and disclosures aren’t just bureaucratic processes—they’re safeguards. The government uses these tools to monitor compliance, protect revenue, and prevent misuse of tax provisions.
This blog dives into the key elements of Federal Decree-Law No. 28 of 2022 on Tax Procedures, focusing on Part I of the topic.
Compliance Requirements
Let’s start with the basics. Every taxpayer has legal duties under the Tax Procedures Decree-Law.
These are not just about paying tax—they’re about how you conduct and document your business:
- Maintain proper records: You must keep accounting and commercial books as prescribed under the law.
- Language matters: All tax returns and supporting data must be submitted in Arabic. However, the authority may accept documents in English—with the right to request Arabic translations if needed.
- Foreign languages? Only if accompanied by an Arabic version.
This ensures uniformity and makes it easier for the authorities to verify and cross-check documents across all businesses.
Tax Registration
If you’re subject to corporate tax, you must register—and quote your Tax Registration Number (TRN) in all communications with the tax authority.
That’s not all:
- If there’s any change in your registration details, you’re required to update the authority within 20 business days using the correct form and format.
Failure to keep your registration info current can create administrative problems—and may invite penalties.
Legal Representative
If a legal representative is appointed to act on behalf of a taxpayer:
- They must notify the tax authorities within 20 business days
- They become responsible for submitting returns and complying with all obligations on behalf of the taxpayer
But keep this in mind—appointing a legal representative doesn’t shift liability. The taxpayer remains accountable for the accuracy of the returns and information submitted.
Tax Returns
Here’s where things often go wrong for businesses that aren’t paying attention.
- If a return lacks mandatory details required by law, it can be rejected
- The taxpayer is held responsible for the accuracy of all data submitted—even if done by someone else
This section reinforces the need for precision and completeness in every tax return.
Voluntary Disclosure
Mistakes happen. But the UAE law gives taxpayers a chance to come clean voluntarily.
When must you submit a voluntary disclosure?
- If you realize you paid less tax or claimed more refund than you should have
- If you notice an error or omission in a filed return—even if the tax amount is unchanged
- If your tax return, refund request, or FTA’s tax assessment turns out to be incorrect
- Even if the mistake results in paying more tax or claiming less refund, disclosure is still encouraged
⏳ There’s a 20 business day window from when you become aware of the error to make the disclosure. Waiting too long can remove your right to file voluntarily—and may lead to penalties later.
Methods of Notification of Decisions / Procedures
When the tax authority needs to communicate with you, they use official notification methods.
Once they send a decision to your registered address, it is legally considered delivered. It doesn’t matter whether or not you actually opened or read the notification.
So, make sure your registered contact info is correct and current—this is your only buffer against missed communications.
Tax Agents
A taxpayer may appoint a tax agent to manage tax affairs on their behalf. But certain conditions must be met:
- The agent must be licensed and listed in the official Register
- The agent must notify the authority if they stop practicing
The agent is allowed to:
- Represent the taxpayer in all dealings with the authority
- Keep and maintain the taxpayer’s documents, data, and records
But remember:
- The taxpayer remains fully responsible for compliance under tax laws
- If an agent is removed or dismissed, the authority will cease all interaction with that agent unless officially updated by the taxpayer
Tax Assessment
Sometimes, things don’t go according to plan—or law.
Here’s when the tax authority may issue an official tax assessment:
- Delay or failure to register
- Failure to file returns or pay tax on time
- Filing an incorrect return
- Legal representatives not following self-assessment requirements
- Evasion or significant shortfall in tax payment
In some cases, the authority may even issue an estimated assessment, especially when actual tax liability can’t be clearly determined. Later, they can revise the estimate once more details become available.
💡 The taxpayer must be notified within 10 business days of any tax assessment or amendment.
Administrative Penalties Assessment
Even if there’s no fraud or evasion involved, non-compliance can still cost you.
For mistakes that violate tax law—excluding criminal activity—the authority may issue an Administrative Penalties Assessment.
The penalties are:
- Based on a predefined list in the Decree Law
- Capped at twice the amount of tax involved
- Separate from the actual tax liability itself
You’ll receive this notice within 5 business days from the date the assessment is issued.
Tax Audit
A tax audit is not something to fear if your records are clean—but here’s how it works:
- The authority can audit any taxpayer during official working hours, either at the business premises or storage sites
- They must provide a 10-business-day prior notice before visiting
- However, in certain serious situations (like suspected evasion or closed premises), they may skip prior notice, with approval from higher authorities
During the audit, tax officers can:
- Review or seize original documents
- Take samples of goods
- Attach or inspect business devices
- Close the premises temporarily (up to 72 hours) if needed
As a taxpayer, you have rights too:
- Request the auditor’s ID card
- Get a copy of the tax audit notification
- Attend any audit conducted outside the FTA’s premises
- Receive copies of any records or data seized during the audit
If any new information surfaces that might change the earlier findings, the law allows for a re-audit.
Recent Updates
To keep the tax framework agile, the UAE continues to issue Ministerial Decisions. Three key updates include:
1. Accounting Standards and Methods
- If revenue is below AED 3 million, financials may be prepared using the cash basis
- For general cases, IFRS (or IFRS for SMEs) must be followed
- Consolidated statements are required for tax groups, with special exceptions clarified
2. Private Pension & Social Security Funds
- These can be exempt from tax if they meet specific conditions
- Contributions by employers are deductible, but limited to 15% of the member’s deductible remuneration
- Certain reporting obligations fall on the fund’s auditor
3. Participation Exemption
- Income from foreign participations (dividends, capital gains, etc.) can be exempt—if specific conditions are met
- More details are provided under new Ministerial decisions
Final Thoughts
The UAE’s tax system is evolving—but it’s built with clarity, fairness, and accountability at its core.
If you’re doing business here, staying compliant means more than filing returns. It’s about:
- Understanding the law
- Being proactive with disclosures
- Responding to notices
- Keeping records clean
- And maintaining transparency
The rules are strict—but they’re also clear. The better you understand procedures like tax registration, assessments, voluntary disclosures, and audits, the smoother your journey will be.
Compliance isn’t a one-time event. It’s a way of working—and in the UAE, it’s what sets responsible businesses apart.
