Criminal Liability for Tax Evasion in UAE
July 10, 2023
In the United Arab Emirates (UAE), tax evasion is a serious offense that carries significant legal consequences. The UAE has implemented stringent laws and regulations to combat tax evasion and ensure compliance with tax obligations. Individuals or entities found guilty of tax evasion may face criminal prosecution, along with severe penalties, including fines and imprisonment.
This article examines the criminal responsibility for tax evasion in the UAE taking into consideration the efforts made lately by the authorities to detect and prosecute these cases, exploring the legal provisions, penalties, and enforcement measures in place to combat this offense. It highlights the importance of tax compliance, and the consequences individuals or entities may face if found guilty of engaging in tax evasion practices.
Tax evasion is defined the act of an individual employing unlawful methods to avoid paying the required taxes or to wrongfully obtain a tax refund that they are not entitled to according to the applicable legislation related to taxes pursuant to Tax Procedures Law no. 28/2022.
Tax evasion is considered a serious criminal offence which is penalized by a combination of imprisonment and a fine, with the fine being equal to or greater than the evaded tax amount, and not exceeding three times that amount. They may be subject to either imprisonment or the fine, or both penalties concurrently.
The application of the said penalty shall not prejudice the application of a more severe penalty. This is applicable when tax evasion is committed in conjunction with other offenses like document forgery or money laundering.
Tax Evasion acts
Article 25 of the Tax Procedures Law has outlined specific actions that would constitute instances of tax evasion, which are as follows:
- Intentionally refraining from paying any tax obligation.
- Intentionally decreasing the true worth of one’s business or income, or neglecting to disclose associated activities, with the intention of avoiding the registration threshold, a specific tax rate, or any other tax requirement outlined in the tax legislation.
- Intentionally imposing and collecting monetary amounts as taxes without being officially registered.
- Intentionally reducing the amount of tax owed or participating in any form of tax evasion.
- Intentionally undertaking or omitting any action that could potentially constitute tax evasion as defined by this Decree-Law or tax legislation.