New whistle blower program in effect

The UAE Federal Tax Authority (FTA) has introduced a whistle blower programme (called “Raqeeb”) for tax violations and tax evasion to provide a framework for the FTA to review and process leads relating to noncompliance with UAE federal tax laws. The program offers monetary rewards to informants to encourage citizens to report noncompliance with the VAT and excise tax laws.

The FTA released a guide in April 2022 to help informants understand the whistle blowing programme and report business practices that violate tax procedures, as well as the details required in the whistle blowing form and the conditions that must be satisfied for an informant to be eligible for a monetary reward. The informant’s identity will remain confidential and protected by the FTA and will not be disclosed to any legal person/individual being reported and will not be disclosed in legal proceedings against the reported person. Leads or information received from individuals may relate to the following:

Suspected tax evasion, such as a registrant listing false information in its tax returns or a taxable person evading tax registration requirements; or
Suspected noncompliance with tax laws and procedures, such as failure to issue tax invoices, issuing invoices with incorrect amounts, failure to collect tax, etc.

The introduction of the whistle blower programme will have a significant impact on businesses in the UAE. Businesses should voluntarily rectify any identified errors or omissions at the earliest opportunity before a stakeholder reports the noncompliance to the FTA and should perform regular checks and reviews to ensure they are in compliance with the VAT and excise tax laws. An inspection/ audit from the FTA under the whistle blower program may increase the possibility that any errors by the business will be treated as tax evasion, potentially resulting in higher penalties and imprisonment.

Amrita Chandwani
amrita.chandwani@bdo.ae

Mufaddal Safdari
mufaddal.safdari@bdo.ae