The Federal Tax Authority (FTA) is the ultimate tax regulator in the UAE, covering Corporate Tax, VAT, excise, etc. Therefore, during the initial stages of your business registration process, you file documents that are a record for the FTA. The documents at this stage mainly include information related to business activities, contact information, banking information, and so on. However, this is not the end of your duties; there are ongoing updates needed at the business’s end, such as maintaining ongoing accounts. As a growing or mature business, you must be aware of the importance of updated documents on the FTA portal. In this blog, we shall update you on this matter.
Federal Tax Authority (FTA)
The Federal Tax Authority is a government entity responsible for collecting, administering, and enforcing federal taxes in the United Arab Emirates. Established in 2016, the following are the short-term and long-term aspects of the entity.
- To practice best fiscal practices to enhance economic diversification
- Increasing the non-oil revenue
- To prepare for the post-oil economy and reduce dependence on oil resources
- Enhancement of economic sustainability
- Assisting the business community and consumers in understanding their responsibilities concerning taxation. This, in turn, will guide them to tax compliance.
FTA Portal
In the UAE, tax management is doable all online through the FTA portal, i.e., EmaraTax. It is accessible through the link: https://eservices.tax.gov.ae/
From tax registration to return filing and document management, a business can manage all things under one roof. Furthermore, any refund requests or correspondence are also applicable on the portal.
Importance of Updated Documents on the FTA Portal
Businesses registered for VAT or Corporate Tax in the UAE must maintain accurate and up-to-date records on the FTA portal. This is as per the UAE laws and regulations. However, failure to follow this important administrative responsibility will result in penalties, compliance issues, and even disruptions to your business.
The Legal Background
As per Cabinet Decision No. 74 of 2023, the tax registrant must notify the FTA within 20 business days if there are any changes in the data kept with the FTA. This data may include the name and address of the business, email address, trade license, legal entity type, nature of business, documents related to partnership agreements, and articles of association. Furthermore, the registrant must update any address where it conducts business activity.
Let’s highlight some of the key elements that highlight the importance of updated documents on the FTA portal.
Streamlined Tax Filing
One of the important benefits of keeping updated documents, including the accounts, will result in a streamlined tax filing. If all the information is already there in a portal, there will be less panic and stress during the filing period.
Avoid Penalties
The other aspect of document management is to avoid any penalties. For instance, as per Cabinet Decision No. 75 of 2023, there is an administrative penalty. This is in case of failure of the registrant to inform the authority of any case that may require the amendment of the information about their tax record kept by the authority. As per the current updates, AED 1,000 applies to each violation. However, an AED 5,000 penalty applies in each case of repeated violation within 24 months from the date of the last violation. Thus, this shows the importance of updated documents on the FTA portal.
Correspondence with FTA
The FTA portal serves as a correspondence medium between you and the tax authority. The communication and notifications by the tax authority are dependent on the data and information available on the portal. Therefore, outdated and incorrect information and documents may result in a confusing situation.
Overall Tax Compliance
The tax authority regularly reviews tax registrants’ information to estimate if the businesses meet their tax obligations. This is achievable only if the necessary documents are present in the portal. Therefore, as a business or natural person, documents such as trade licenses, Emirate IDs, passport copies, and financial records should always be available. This, in turn, will assist the tax authority in assessing compliance with the tax laws and thus avoid audits and penalties.
Conclusion
Tax compliance is as important as running a business for entities operating in the UAE. However, it is sometimes tricky to keep up with all the legal responsibilities. Therefore, it is always necessary to keep yourself updated with the laws. For instance, tax filing and settling tax liabilities are somehow the most important tax responsibilities. However, maintaining documentation in the FTA portal is as important as other responsibilities. There are various reasons for this, and we have discussed this in our blog. The key here is that you must be aware of the importance of updated documents on the FTA portal. This, in turn, will keep your business compliant and protect you from hefty penalties.
Creative Zone Tax & Accounting (CZTA)
To keep up with the tax compliance and follow the documents’ requirements as per the UAE laws, it is important to consult an expert. Our team works strenuously to keep their eye on the legal changes and updates in the regulatory landscape of the UAE. Therefore, we strongly recommend that you consult us to remain compliant and avoid fines. Contact us today.
