The Administrative penalties are monetary amounts imposed upon a person by the Federal Tax Authority (FTA) for breaching the provisions of the Tax Law. The new penalty structure encourages the early submission of voluntary disclosure by applying comparatively low percentages of penalties submitted closer to the due date of relevant tax return.
On the other hand greater penalties will apply where errors are discovered in the course of a tax audit. The will also accumulate from the due date of the relevant tax return. There for business must work towards identifying such errors and reporting them to the Federal Tax Authority before it is notified of any Federal Tax Authority audit.
Here the new calculation of late payment penalties is given. The key change affects late payment penalties. these are now reduced from 1% per day to 4% per month and the 300% cap on the late payment penalties still applies.
- 2% of the unpaid tax immediately past the due date.
- 4% per month thereafter commencing a month after the due date.
Penalty charges
| Penalties | New rule |
On the first day the tax payment is late | 2% |
On the seventh day following the deadline for payment | Not applicable |
One calendar month following the deadline for payment | 4% monthly (with a limit of 300%) |