With the implementation of UAE Corporate Tax under Federal Decree-Law No. (47) of 2022, compliance has become a critical governance priority for businesses operating in the UAE. Beyond registration and filing obligations, companies must understand the penalty framework, the available appeal and review mechanisms, and the implications of the Raqeeb whistleblower programme.

This article provides a clear and practical explanation of:

• Administrative penalties applicable under UAE Corporate Tax
• The grace period and relief mechanisms for compliance lapses
• Tax assessment reviews and private clarifications
• The Raqeeb whistleblower programme and its impact on businesses

Administrative Penalties under UAE Corporate Tax

Cabinet Decision No. (75) of 2023

Cabinet Decision No. (75) of 2023 (as amended) establishes the administrative penalties for violations related to the application of Federal Decree-Law No. (47) of 2022 on the Taxation of Corporations and Businesses.

Key violations attracting penalties include:

• Failure to register for Corporate Tax within the prescribed timeline
• Failure to file Corporate Tax Returns
• Late payment of Corporate Tax due
• Submission of incorrect or misleading information
• Failure to maintain required books and records
• Failure to update tax registration details with the Federal Tax Authority (FTA)
• Non-cooperation during tax audits or assessments

The above violations may be categorised broadly into procedural non-compliance (such as registration, filing, and record-keeping failures) and substantive non-compliance (such as misrepresentation, concealment, or tax evasion), with significantly higher exposure where intent is established.

Nature of penalties

Penalties may be:

• Fixed monetary penalties for specific breaches
• Escalating penalties for repeated non-compliance
• Additional penalties where intentional tax evasion or concealment is identified

Certain penalties under Cabinet Decision No. (75) of 2023 may accrue on a recurring basis until the violation is rectified, substantially increasing overall exposure if non-compliance continues.

Administrative penalties are imposed separately from the underlying tax liability and do not replace the obligation to pay due Corporate Tax.

Grace Period for Updating Tax Records

TAXP007: Public Clarification

Under TAXP007, the FTA introduced a grace period allowing taxpayers to update certain information in their tax records without incurring administrative penalties.

Information that must be updated includes:

• Legal name or trade licence details
• Shareholding or ownership changes
• Business activities
• Authorised signatories
• Branch additions or closures
• Contact details and addresses

Compliance timeline

Generally, taxpayers are required to update their records within 20 business days from the date the change occurs. If the update is made within the grace period specified by the FTA, applicable penalties may be waived or reversed.

It is important to note that the grace period under TAXP007 does not create an automatic right to penalty waiver. Relief applies only where the conditions of the clarification are met and where the FTA accepts the update as qualifying under the prescribed framework.

Why this matters

Many penalties arise not from deliberate non-compliance, but from administrative oversights. Timely updates under TAXP007 provide a critical opportunity to regularise records and reduce exposure to fines.

Challenging Tax Assessments

TAXP008: Tax Assessment Reviews

When a business disagrees with a Corporate Tax assessment issued by the FTA, TAXP008 outlines the process for requesting a Tax Assessment Review.

Grounds for review may include:

• Errors in calculation or interpretation of law
• Incorrect application of exemptions or reliefs
• Factual inaccuracies
• Procedural non-compliance by the tax authority

Key procedural aspects:

• Review requests must be submitted within the statutory time limits
• Clear documentation and legal reasoning are essential
• The FTA may confirm, amend, or cancel the assessment

Strict statutory deadlines apply under the UAE Tax Procedures Law, and failure to submit a review request within the prescribed period may result in the assessment becoming final and enforceable.

A Tax Assessment Review is often the first and most effective step before escalation to reconsideration committees or judicial channels.

In practice, the procedural sequence generally involves: issuance of an assessment, submission of a Tax Assessment Review under TAXP008, reconsideration (where applicable), escalation to the Tax Dispute Resolution Committees, and ultimately judicial appeal through UAE courts.

Private Clarifications

TPGPC1: Certainty Before Transactions

Private Clarifications allow taxpayers to obtain the FTA’s written position on the tax treatment of a specific transaction or arrangement, based on defined facts.

When private clarifications are advisable:

• Complex corporate restructurings
• Group transactions and intra-group arrangements
• Cross-border transactions
• Unclear application of Corporate Tax exemptions

Key benefits:

• Reduced future dispute risk
• Strong evidentiary support during audits
• Improved tax certainty for business decisions

Private Clarifications are binding on the FTA only if the actual facts match those disclosed in the application, making accurate disclosure essential.

Private Clarifications generally apply prospectively and do not override the provisions of the law itself; they serve as interpretative guidance based on the facts presented. Any material deviation from the disclosed facts may render the clarification invalid.

Raqeeb, Whistleblower Program for Tax Violations

The Raqeeb Whistleblower Program enables individuals to confidentially report tax violations or evasion to the Federal Tax Authority.

Reportable matters include:

• Intentional tax evasion
• Concealment of taxable income
• Falsification of records
• Abuse of tax exemptions or reliefs
• Organised schemes to avoid Corporate Tax

Key features of the programme:

• Confidential handling of information
• Secure reporting channels
• Independent evaluation by the FTA
• Possible initiation of audits or investigations

The Raqeeb programme does not guarantee financial rewards to whistleblowers, and all reports are subject to verification and evaluation by the FTA before any enforcement action is initiated.

Implications for businesses

The existence of Raqeeb significantly increases detection risk. Businesses must ensure:

• Strong internal controls
• Transparent accounting practices
• Internal whistleblower and grievance mechanisms
• Prompt investigation and remediation of compliance concerns

Not all reports automatically result in penalties; the FTA evaluates substance over allegation, and safeguards exist against false or malicious reporting.

How Penalties, Appeals & Whistleblowing Interconnect

In practice, these three areas operate together:

1. Non-compliance occurs (intentional or accidental)
2. Detection through audit, data analytics, or whistleblower reporting
3. Administrative penalties imposed under Cabinet Decision No. 75
4. Review or appeal through TAXP008 or clarification via TPGPC1

Early action and professional handling can significantly mitigate financial and reputational consequences.

Best-Practice Compliance Checklist for UAE Businesses

• Maintain accurate and up-to-date tax registration details
• Track Corporate Tax filing and payment deadlines
• Retain proper books and records for statutory periods
• Review transactions proactively for tax risk
• Use private clarifications for complex matters
• Establish internal reporting and compliance escalation channels
• Respond promptly and professionally to FTA communications

How German Fintax Consultancy Can Assist

German Fintax Consultancy supports UAE businesses with:

• Corporate Tax compliance health checks
• Penalty exposure reviews and remediation
• Tax assessment reviews and dispute management
• Private clarification applications
• Whistleblower-risk mitigation and internal policy design

Conclusion

The UAE Corporate Tax framework is supported by a robust enforcement, review, and reporting system. Understanding penalties, appeal mechanisms, and the Raqeeb whistleblower programme is no longer optional, it is essential for sustainable compliance and corporate governance.

With the right advisory support and proactive compliance strategy, businesses can manage risk effectively and operate with confidence under the UAE Corporate Tax regime.

Frequently Asked Questions (FAQs)

1. What are administrative penalties under UAE Corporate Tax?

Administrative penalties are monetary fines imposed by the Federal Tax Authority (FTA) for non-compliance with Federal Decree-Law No. (47) of 2022 and related regulations. These penalties apply in addition to the underlying Corporate Tax payable and are governed by Cabinet Decision No. (75) of 2023.

2. Can administrative penalties be waived or reduced?

Yes. Penalties may be waived or reversed in certain situations, such as:

• Where updates are made within the grace period specified under TAXP007
• Where penalties are imposed due to genuine errors and corrected promptly
• Where a successful Tax Assessment Review or reconsideration is approved

Each case is assessed individually by the FTA.

3. What is the grace period under TAXP007?

TAXP007 provides a grace period allowing taxpayers to update specific information in their tax records without incurring penalties. Generally, required updates must be made within 20 business days of the change date. Updates made within the grace period may result in penalties being waived or reversed.

4. What information must businesses update in their tax records?

Businesses must update details such as:

• Legal name or trade licence information
• Shareholding or ownership changes
• Business activities
• Authorised signatories
• Branch openings or closures
• Contact and address details

Failure to update this information on time may attract administrative penalties.

5. What is a Tax Assessment Review (TAXP008)?

A Tax Assessment Review is a formal request submitted to the FTA when a taxpayer disagrees with a tax assessment. It allows businesses to challenge errors in calculation, interpretation of law, or factual inaccuracies before escalating the matter further.

6. Is there a deadline to request a Tax Assessment Review?

Yes, Tax Assessment Reviews must be submitted within the statutory time limits prescribed under the UAE Tax Procedures Law and related guidance. Missing these deadlines may result in the assessment becoming final and enforceable.

7. What happens if a Tax Assessment Review is rejected?

If a review is rejected or only partially accepted, the taxpayer may explore further remedies such as:

• Filing a reconsideration request (where applicable)
• Escalating the matter to the relevant dispute resolution committees
• Judicial appeal through UAE courts

Professional guidance is strongly recommended at this stage.

8. What is a Private Clarification (TPGPC1)?

A Private Clarification is a written clarification issued by the FTA on the tax treatment of a specific transaction or arrangement, based on facts submitted by the taxpayer. It provides certainty and reduces the risk of future disputes.

9. Are Private Clarifications legally binding?

Yes, Private Clarifications are binding on the FTA provided the actual facts match those disclosed in the application. Any material deviation from the disclosed facts may render the clarification invalid.

10. What is the Raqeeb Whistleblower Program?

Raqeeb is an FTA initiative that allows individuals to confidentially report tax violations or evasion. Reports may trigger audits or investigations and can lead to penalties, recovery of unpaid taxes, and reputational consequences for businesses involved.

11. Can employees or third parties report a business under Raqeeb?

Yes, any individual with relevant information, including employees, former employees, vendors, or competitors, may submit a report under the Raqeeb programme.