The Federal Tax Authority (“FTA”) has released FTA Decision No. 1 of 2024 on Professional Standards of Tax Agents which outlines the mechanism of application of black points system to Tax Agents on violation of professional standards or code of ethics prescribed by FTA.

For ease of reference, we have summarized below the key points including our comments from a practical aspect:

  • Application of Black Points to Tax Agents: The decision of FTA regarding application of black points has been summarized as follows:
Particulars Explanation
Application of Black Points to Tax Agents The FTA has provided that the black points shall be applied to the tax agents as follows:

Violation committed by Black points shall be applied to:
Natural Person Tax Agent Who does not work for a juridical person Tax Agent Such natural person Tax Agent
Who works for a juridical person Tax Agent Both Natural person Tax Agent, and Juridical person Tax Agent
Representative of a juridical person Tax Agent And such violation is related to or affecting the client represented by the juridical person Tax Agent Ø Natural person Tax Agent appointed to represent the client, and

Ø Juridical person Tax Agent

And such violation is not relating to or affecting the client represented by the juridical person Tax Agent Ø Juridical person Tax Agent only
Basis of assignment and expiry of black points
  • Black points will be assigned based on violations of different categories of professional standards (i.e. code of ethics) by natural/juridical tax persons.
  • Code of ethics are broadly classified under below mentioned categories:
    • Confidentiality;
    • Integrity;
    • Objectivity;
    • Professional Behaviour;
    • Professional Competence.
  • Black points will also expire within a range of 12 months to 24 months depending on the violation committed by Tax Agent.
  • However, for certain specific type of violation, black points assigned would be permanent and will not expire.
Consequence of accumulated points of a Natural/Juridical Person Tax Agent FTA has assigned different slabs based on accumulated points and Natural/juridical person would face different consequences as mentioned below:
Accumulated Points Procedure
If the Tax Agent is a Natural Person If the Tax Agent is a juridical person
Up to 75 points Up to 75 x (the number of natural person Tax Agents working for the juridical person) points Tax Agent will be notified of the violations, black points applied to them, and the need to take precautionary measures.
Up to 149 points Up to 149 x (the number of natural person Tax Agents working for the juridical person) points A first warning shall be sent.
Up to 199 points Up to 199 x (the number of natural person Tax Agents working for the juridical person) points A second warning shall be sent.
200 points 200 x (the number of natural person Tax Agents working for the juridical person) points Deregistration of the Tax Agent from the register, and inform all registrants associated with this Tax Agent on the Authority’s system of such deregistration.

PKF Comments:

  • With effect from July 01, 2024, Black points shall be imposed on Tax Agents in the event of a violation of different categories of Code of ethics like Confidentiality, Integrity, Objectivity, Professional Behaviour and Professional Competence.
  • Different consequences would be faced by Tax Agents based on the slab of accumulated which ranges from notifying Tax Agent to deregistration of Tax Agent from the tax register.
  • Expiration period to accumulated black points are also assigned, however, some violations have been categorised as permanent assignment of black points.
  • As a result, Tax Agents whether natural/ juridical are required to practice diligence in carrying out their functions, and follow professional standards/ code of ethics prescribed by FTA.

Source: www.tax.gov.ae/en

How can PKF help?

PKF UAE is a leading firm that provides professional financial advisory, assurance, VAT, Corporate Tax, ESR and International tax services in the UAE. PKF UAE brings world-class capabilities and high-quality service to clients helping them to align their working model to government reporting and compliance requirements.

Businesses in the UAE must imbibe the VAT, new Corporate Tax and ESR regulations and establish for themselves a tailor-made Tax-oriented business system. PKF UAE brings world-class capabilities and high-quality service to clients helping them to align their working model to government reporting and compliance requirements.

Our role as tax advisers include:

  • Analyzing the impact of VAT on your business, advising on managing the VAT transaction process, manage VAT transactions effectively without any room for errors, invoicing under VAT and advising on VAT related compliances as required by UAE VAT Law.
  • Undertaking the Corporate Tax and Transfer Pricing impact assessment, analyzing relevant implications to your businesses, tax structuring advisory for the group as a whole, analysis of any Permanent Establishment or Place of effective management implications, providing assistance in Corporate Tax and Transfer Pricing compliances such as Corporate Tax Registration, Corporate Tax Return, Transfer Pricing Forms.
  • Advising on applicability of Economic Substance Regulations whether your business is required to carry out ESR compliance, assistance in ensuring timely compliance with the notification and report filing requirements of the ESR including collating details required in the ESR reporting form and related declarations.

With more than four decades of experience, PKF UAE ensures full guidance on how businesses can duly comply with various regulations. While the ultimate responsibility and accountability to comply with the law are with the business, PKF UAE can advise at every stage of your business operations. PKF UAE works with an agenda that not only helps your business meet the required VAT, Corporate Tax, ESR standards but also provides inclusive solutions to run the business effectively.

Contacts

You may email us or can contact any of our team members relating to your queries on this subject:

Stany Pereira Shailesh Kumar Mradul Gupta Megha Lohia Soumya Tiwari
Managing Partner Director – Tax Services Senior Manager Assistant Manager Tax Senior
stany@pkfuae.com skumar@pkfuae.com mgupta@pkfuae.com mlohia@pkfuae.com soumya@pkfuae.com

 

Disclaimer:

This document has been prepared as a general guide. It is not substitute for professional advice. Neither PKF UAE nor its partners or employees accept any responsibility for loss or damage incurred as a result of acting or refraining from acting upon anything contained in or omitted from this document. If you wish to be included on the regular mailing list for this newsletter, forward your request to Email: dubai@pkfuae.com

PKF UAE is a member firm of the PKF International Ltd family of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member or correspondent firm or firms.