Welcome to the Septmber edition of our tax newsletter, bringing you news on global and regional tax developments. 

The UAE Supreme Court has issued a ruling in its first tax evasion criminal case

All taxpayers should take note of the UAE Federal Supreme Court’s first ruling on tax evasion in a criminal case.

Tax evasion, under the Tax Procedures Law is defined as “The use of illegal means resulting in the reduction of the amount of the Due Tax, non-payment thereof, or a refund of a tax that a person does not have the right to have refunded under any Tax Law.”

The criminal penalties which apply for committing tax evasion are significantly more severe than the administrative penalties that may otherwise apply where an entity makes a voluntary disclosure (VD) within the appropriate time limits. Depending on the circumstances, a prison sentence or monetary penalty not exceeding five times the amount of evaded tax or both may be imposed on the taxpayer in circumstances of tax evasion.

The potential implications of this ruling, coupled with the recent reduction in administrative penalties where a taxpayer submits a VD to the FTA, will encourage taxpayers to review their tax affairs and submit VDs where appropriate or seek further clarification from their adviser or the FTA. In general, taxpayers are required to submit a VD correcting an earlier error within 20 working days of becoming aware of that error. While submitting a VD within the permitted timeframe can significantly reduce administrative penalties, failure to submit a VD within this timeframe will result in additional penalties.

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