UAE Corporate Tax: Black Points for Tax Agents' Incorrect Advice Starting July 1

Starting July 1, UAE tax agents will face penalties, known as 'black points', for providing incorrect advice to clients regarding their corporate tax obligations.

The move is part of a broader effort to enhance the regulation of tax agents in the UAE, aligning with international standards. These penalties aim to deter misconduct and negligence among tax agents, ensuring they adhere to updated standards and continuously update their knowledge.

The application of 'black points' will vary based on the nature of the violation:

• If the violation is committed by an individual tax agent not associated with a corporate entity, black points will be applied to the individual.
• If the violation involves a tax agent employed by the client, both the individual agent and the corporate client will receive black points.
• If the violation involves a representative of a corporate tax agent affecting the client, both the individual tax agent and the tax agency will be penalised.
• If the violation involves a representative of a tax agency not affecting the represented client, only the individual tax agent will receive black points.

Tax agents are an intrinsic part of the unfolding corporate tax regime in the UAE. As per the Federal Tax Authority (FTA), they will represent clients before the authority and will oversee the filing of their annual tax returns.

In fact, it is prohibited to practice as a tax agent without completing the registration and receiving accreditation from the FTA.The criteria for accreditation are:

• A Bachelor's or Master's degree in tax, accounting, or law from a recognised educational institution. Or a tax certification from an internationally known tax institution if the Bachelor's degree is in any other field.
• Recent professional experience of at least three years in either tax, accounting, or law.
• Language proficiency documentation for both Arabic and English, written and spoken.

Penalties on tax agents also come into effect for other acts of omission or commission. Now, if a tax agent is found to have shared information about the client - or any taxpayer -- with a third party without their explicit consent in writing, they will face a deduction of 100 points.

The exception is when agents have a reason to disclose under a 'legal, professional, or regulatory obligation'.

Additionally, 200 points will be docked if tax agents promote, design, or jointly design 'aggressive tax planning' marketed to multiple taxpayers, with the intention to breach any law or jeopardise the integrity of the tax system, resulting in a loss of revenue for the FTA.

For any enquiries or information, contact ask@tlr.ae or call us on +971 52 644 3004. Follow The Law Reporters on WhatsApp Channels.