The responsibilities on UAE's tax agents have increased as a new points system come into effect from July 1. Image Credit: Shutterstock

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

  1. If a violation is committed by an agent who does not work for that corporate entity, black points shall be applied to the individual.
  2. If a violation is committed by an agent who works for the client, black points shall be applied to both the individual and the corporate client.
  3. If a violation is committed by a representative of a corporate tax agent - and such violation is related to or affecting the client - black points shall be applied to both the individual tax agent appointed to represent the client and the tax agency.
  4. If the violation is committed by a representative working for a tax agency - and such violation is not relating to or affecting the client represented by the agency - black points shall be applied only to the individual tax agent.

These black points will be applied to tax agents - individual or a business - for various acts of misconduct and negligence.

- Jeet Gianchandani of JCA

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.

  1. 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.
  2. Recent professional experience of at least three years in either tax, accounting or law.
  3. Language proficiency document 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 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."