MoF to penalize violators of income tax procedures

A two percent fine on each invoice that does not identify the revenue source

To control income tax evasion, the Ministry of Finance (MoF) has imposed a series of penalties for companies and independent professionals who fail to follow proper tax reporting procedures.

Any tax payer who submits a transaction to the MoF that does not have the relevant receipt attached, or which includes an invoice that does not mention the name of the revenue source or service provider, will be fined two percent of the value of the transaction.

Taxpayers who submit any invoice that does not mention the fiscal number, or the address of the revenue source, or the name, fiscal number, and address of the recipient will pay a fine of 0.5 percent of the value of the transaction.

The MoF decision was published on June 7 and outlines the new measures to be taken in case tax procedures are violated. The decision applies to corporations and independent professions, who are obliged to provide the ministry with details of any taxable transaction in line with the Tax Procedures Code.

According to the 2008 Tax Code taxpayers must include their fiscal number and the fiscal numbers of their clients on all relevant documents (mainly invoices). The fiscal number is an MoF reference assigned to every taxpayer. “It allows us to better manage tax collection,” said Ahmad Kaouk, head of Tax Collection Division at the MoF. The measure aims to ensure that revenue sources are legitimate and prevent tax evasion.

Kaouk said the MoF matches the fiscal numbers of the two parties to a taxable transaction to make sure the details match: “This procedure allows us to control the dealings of taxpayers and detect any tax evasion attempt.”

A taxpayer who transacts business with a non-profit organization should inform the MoF within 20 days from the transaction date and declare the name and address of said organization. Otherwise, they could be liable to a fine of 0.5 percent of the transaction’s value.

Reported by Abeer Darwiche