FTA issues decision implementing Professional Standards for Tax Agents

Background

On 15 January 2024, the Federal Tax Authority (FTA) issued Decision No. (1) of 2024, effective from 1 July 2024, which introduces a structured framework for upholding professional standards among tax agents in the United Arab Emirates (UAE). This decision is pivotal as it lays down a comprehensive guide that includes the standards, controls, conditions, and procedures tax agents are expected to follow.

Black points

A key feature of the decision is the implementation of a "black points" system designed to enforce these standards. Under this system, tax agents, both natural persons and juridical entities, are penalized for professional misconduct through the accrual of black points. The implications of accumulating these points range from initial notifications to warnings, and for severe or repeated violations, may escalate to deregistration of the tax agent from the FTA’s official register. This mechanism ensures that tax agents adhere strictly to the professional ethics and standards required by the FTA.

The system is structured such that different thresholds of accumulated points trigger specific actions by the FTA, aimed at maintaining the integrity and effectiveness of the tax administration within the UAE. The decision also details the expiry terms for these points, ensuring that agents have the opportunity to rectify their practices within a defined timeframe.

Administrative guidance

In December 2023, the FTA released a comprehensive tax procedures guide titled "Professional Standards for Tax Agents"¹, which delineates the expectations, roles, and responsibilities of tax agents within the UAE tax system. This guide is particularly crucial following the introduction of several taxes such as excise tax, VAT, and corporate tax, necessitating clear guidelines for the administration of these taxes and the role of tax agents. The guide replaces the previous version which was issued in May 2019.

The document outlines who qualifies as a tax agent, the registration requirements, and the duties and responsibilities that come with the role. A tax agent, defined as any natural or juridical person registered with the FTA, acts on behalf of another person to assist them in meeting their tax obligations. It’s important to note that while tax agents help ensure compliance, their appointment does not absolve the taxable person from their legal responsibilities.

To be registered, tax agents must meet stringent criteria, including having appropriate educational qualifications and professional experience, being of good conduct, and holding a professional indemnity insurance. The registration process is clearly defined and requires potential tax agents to demonstrate their adherence to these standards.

Once registered, tax agents have specific duties and responsibilities, including maintaining confidentiality, meeting continuous professional development requirements, and assisting taxpayers effectively during audits. The guide emphasizes the importance of professional ethics, mandating that agents act with integrity, objectivity, and competence.

Additionally, the guide details circumstances under which a tax agent’s registration might be rejected or revoked. This could happen if an agent fails to meet the required standards or if their actions could potentially harm the integrity of the UAE tax system.

Conclusion

Decision No. (1) of 2024 by the FTA introduces a significant regulatory framework for tax agents in the UAE, emphasizing professionalism through a monitored penalty system. This decision aims to enhance compliance and professional standards among tax agents.

Reference

• FTA Decision No. (1) of 2024 on Professional Standards for Tax Agents
• FTA Tax Procedures Guide on Professional Standards for Tax Agents (TPGTA1) - December 2023