UAE Law and Practice Contributed by: Stuart Paterson, Janine Mallis, Tania Forichon and Elif Eren Ozenir, Herbert Smith Freehills Kramer LLP
The DFSA may impose a broad range of sanctions in respect of the contravention of the Markets Law on such terms as it may direct by way of penalty. The insider dealing and market abuse regime in the ADGM is similar to that of the DIFC. 3.5 Tax Fraud Tax evasion under Federal Decree-Law No 28 of 2022 on Tax Procedures (the “Tax Procedures Law”) is defined as the use of illegal means to reduce the amount of tax due, non-payment thereof or the refund of a tax that a person did not have the right to have refunded under any UAE tax law. A company that engages in the following fraudulent conduct in relation to tax will be liable to pay a fine not exceeding three times the amount of the evaded tax (Article 25): • deliberately failing to settle any payable tax or administrative penalties; • deliberately understating the actual value of the rel - evant business and failing to consolidate its related businesses, with the intent of remaining below the required registration limit; • imposing and collecting amounts from their clients as a tax without being registered; and • deliberately decreasing the payable tax through tax evasion or complicity in tax evasion. A company that engages in the following fraudulent conduct in relation to tax will be liable to pay a fine not exceeding AED1 million (Article 25): • deliberately submitting wrong information and incorrect data to the Federal Tax Authority (FTA); • deliberately concealing or destroying documents or other materials that they are required to keep and submit to the FTA; • stealing, misusing or causing the destruction of documents or other materials in the possession of the FTA; and • preventing the FTA’s employees from performing their duties. There is no specific obligation to prevent tax evasion under Federal Law, except for the DFSA and ADGM
requirements for the maintenance of systems and controls noted in 3.3 Anti-Bribery Regulation . How - ever, the FTA does operate the Raqeeb whistle-blower programme, which allows individuals to confidentially report tax violations and evasion, including corporate tax, VAT and excise tax offences, with potential mon - etary rewards for credible information. 3.6 Financial Record-Keeping Article 26 of the Companies Law requires UAE com - panies to keep accounting records with details of their dealings in order to reveal the company’s financial sit - uation, accurately and at any time. The records must be maintained at the company’s main office for no less than five years as of the date of the end of the com - pany’s fiscal year. The accounts and auditor’s report must also be provided to the securities and commodi - ties authority and any competent authority within sev - en days of the general assembly meeting at which the accounts were submitted (Article 238). The manager of a company is responsible for the preparation of the profit-and-loss account and annual report regard - ing the company’s activity and financial position. This must be presented to the shareholders by way of a general assembly meeting within three months of the end of the fiscal year (Article 87). A company that provides information that is false or contrary to law may be fined between AED200,000 and AED1 million (Article 346). Any manager or director who deliber - ately gives false information to conceal the compa - ny’s financial position will also face imprisonment of between six months and three years and/or a fine of between AED100,000 and AED500,000 (Article 349). Article 122 (1) of Companies Law No 5 of 2018 (the “DIFC Companies Law”) requires companies in the DIFC to keep accounting records with details of their transactions in order to provide evidence of the finan - cial position of the company at any time with reason - able accuracy. If Article 122 is not complied with, or if the following requirements are not met, the company will be liable to a fine of USD25,000. The company’s accounting records must be: • kept at such a place as the directors think fit, except where otherwise prescribed in the regula - tions;
287 CHAMBERS.COM
Powered by FlippingBook