Whistle Blowing Program in the UAE for Tax Violation

Taxation

Whistleblowing program in the UAE – another approach for ensuring VAT compliance

Ensuring VAT compliance is very important in any country to maintain a stable VAT economy and to support businesses with a healthy environment to grow. The Federal Tax Authority (FTA) has introduced a new mechanism for whistleblowing for any non-compliance with the VAT Law. This initiative is introduced with public participation to contribute to improving VAT compliance by tax registrants or eligible persons in the UAE. 

The main objective of this initiative is to bring awareness for individuals and businesses to comply with tax legislation and report on tax irregularities. Any person can act as an informant to the FTA if he notices or identifies any non-compliance to the VAT law and this will help the authority to ensure or improve VAT compliance in the UAE. The program is having the scheme to appreciate the informants who are part of the VAT compliance mission with a monetary reward when certain conditions are met.

Who can be the informant in the UAE?

Any natural person who identifies or notices any non-compliance to the VAT Law can become an informant. He can inform the FTA if he identifies any natural or legal person is conducting some transaction without complying with the provision of the UAE VAT Law. For instance, if a person purchases furniture from a trader in the UAE and has not received a tax invoice from them, then it can be reported to FTA. Before reporting he should check if the trader is a VAT registered person or supposed to be registered based on the taxable sales and regularly doing similar non-compliance which is resulting in tax evasion. Another example can be a business collecting advances but not issuing tax invoices to customers for advances collected. If the customer or another person identifies that there is VAT non-compliance for a significant amount, then can be reported through this program.

The important condition under the scheme is that the informant is not permitted nor possible to submit anonymous leads to the FTA. So, all the informants should provide the details to identify themselves. The FTA will retain the identity of the informant as confidential and will not be disclosed to the non-complying person.    

What is considered whistleblowing information or leads? 

The whistleblowing information or leads submitted to the FTA by the natural person shall be respected for the following:

  1. Suspected Tax evasion: cases of tax evasion are like the registrant reporting false information in the tax return, the registrant evading from registering for tax purposes, or the registrant claiming excess input than allowed.
  2. Suspected non-compliance with tax laws and procedures: scenarios for non-compliance are non-issuance of tax invoices, tax invoices not containing the correct amounts, non-collection of tax, or offering to charge a lower price where the recipient pays in cash without receiving the tax invoice, etc.

At the time of submitting the lead, an informant shall also be required to sign a non-disclosure agreement to ensure the protection of any confidential or sensitive information, including information on monetary rewards. 

How to submit the information under the whistleblowing process?

Any person who wants to submit the information to the FTA can submit the application through the FTA website, www.tax.gov.ae. Informants can see an icon RAQEEB on the FTA website which will lead you to the whistleblowing form. A person should accept the non-disclosure agreement before providing the information and later should share informant details, reported person details, tax evasion, or violation information through the form. Once the information or lead is submitted, FTA will review it and will consider it for audit or make decisions. FTA may contact the informant if any additional information or detail is required related to the lead. Hence this process will ensure tax compliance in the country with joint efforts of FTA with the public.

 Are there any rewards given to the informants? 

FTA has introduced monetary rewards to the informant who reports proper information about any VAT non-compliance to encourage public participation in the effort to ensure VAT compliance in the country. FTA pays monetary rewards to those eligible informants upon the fulfillment of the conditions:

  1. The information provided is credible, accurate, and has not been obtained previously by the FTA.
  2. The whistleblowing form is filled out accurately, completely, and sufficiently.
  3. The tax amount involved in the non-compliance reported exceeds AED 50,000
  4. The reported person exhausted all forms of objections and appeals.  

The amount of reward will be decided by the FTA in proportion to the amount of tax collected by the FTA from the noncomplying business or person based on the information or detail submitted by the informant. Such rewards will not be provided to the employees of FTA and their relatives.

Please watch the YouTube video for more understanding

 

For more details contact 

CA. Ajil Varghese
Manager - Taxation
M: +971564709920   
E: ajil@emiratesca.com

 

 

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