Taxpayers have a strong reason to rejoice basis a recent Tax Disputes Resolution Committee (TDRC) judgment that has reversed retroactive penalties imposed at the time of filing of Voluntary Disclosure (VD) applications.
Currently, under the Tax Procedures Law, where a taxpayer has defaulted in payment of tax and gets it rectified by filing a VD, FTA has been levying administrative penalties at 50% /30% / 5% and in addition have also been levying penalties at 1% per day which went up to 300%. Thus, making the total penalty up to 356% of the unpaid tax value.
Vide this judgment, it has been held that taxpayers who have voluntarily filed VD's within the prescribed time limits, should only be subject to 5% penalty and any other penalty should not be levied.
This is a big relief to the taxpayers who have been quite nervous on their fate with the appellate authorities after being imposed high level of penalties by the FTA. This judgment also restores the faith in judiciary that honest taxpayers who acted in good faith by filing VD's would not be harshly penalized. It is important that the action to file VD's is taken within the permissible time period.
As action points, taxpayers should:
We are trying to arrange a copy of the judgment and as soon as we get that, we will publish it (after appropriate permissions are obtained).