UAE Corporate Tax: 'Black points' to be issued to tax agents for wrong advice from July 1

Dubai: The operations of registered ‘tax agents’ in the UAE have been tightened up further, with recent guidelines issued on penalties that will be imposed on wrongful advice to clients on their corporate tax obligations. The penalties – in the form of ‘black points’ – will come into effect July 1.

This is on top of the requirements mandated for those who wish to be practicing tax agents in the UAE.

“The Federal Tax Authority (FTA) is raising the bar by introducing a code of conduct for tax agents that are in line with international standards,” said Jeet Gianchandani, Chairman of the consultancy JCA. “These black points will be applied to tax agents - individual or a business - for various acts of misconduct and negligence.

“This includes wrong advice to clients, and which might result in financial costs for them. The new FTA standards will make tax agents update their knowledge continuously.”

How FTA’s new ‘black points’ will be applied

More responsibilites on tax agents

Getting to be a registered tax agent in the UAE already requires individuals to put in a set number of hours, etc. "Nowadays, many professional institutes have made it mandatory for their members to attend educational conferences or seminars to score a minimum number of hours, known as CPE (continuous practice education) hours," said Gianchandani. "CAs (chartered accounts) have to score 60 hours in a year - and the UAE Ministry of Economy requires 30 hours of training in a year."

"Clearly, not any Tom, Dick or Harry can become a tax agent."

Who qualifies to be a tax agent?

Tax agents are an intrinsic part of the unfolding corporate tax regime in the UAE. As per the 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 an accreditation from the FTA.

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 info about the client - or for that matter, any tax payer - with a third-party without their explicit consent in writing, they will face a point deduction of 100 points. (The exception is when agents have a reason to disclose under a 'legal, professional or regulatory obligation'.)

And 200 points will be docked if tax agents promote, design or jointly design 'aggressive tax planning' and which is marketed to a number of taxpayers. If this is done with an 'intention' to breach any law or which would jeopardise the 'integrity of the tax system or result in a loss of revenuedue to the FTA'.

Keep on the right track

According to Gianchandani, it's quite straight forward on what agents should be doing - avoid wrong advice in the first place and follow the code of conduct. "They should have the required knowledge and experience to onboard the client,' he added. "This can be achieved by making them more responsible, just like what's expected from doctors and lawyers."