VAT Fines and Penalties in UAE
Oct 02, 2020

Consequences one faces for Late filing or Non-filing of VAT

The FTA (Federal Tax Authority) imposes the VAT fines and penalties in the UAE. All businesses in the UAE must comply with the rules and regulations of the FTA to avoid heavy penalties and VAT fines. All the administrative VAT fines and penalties for violating VAT laws are officially confirmed by the FTA.

VAT Penalties in UAE

Any violation of VAT laws by the companies is met with heavy FTA VAT fines. To ensure the companies stay away from VAT fines and penalties, organizations must adhere to VAT rules as per the FTA. Organizations are advised to consul tax experts before implementing VAT rules.

Beyond Numbers is one such team of tax experts in UAE. Our experts can assist you in implementing VAT in your organization in accordance with FTA, thereby alleviating VAT fines. And under circumstances, if your company has procured a VAT fine, we at Beyond Numbers can help you waive off your fines.

1.Failing to maintain required financial records like the book of accounts, tax invoices as per tax law

AED 10,000 on the first occasion

AED 50,000 for each repeated infraction

2. Failing to submit your documents in Arabic as requested by the FTA

AED 20,000

3. Fine for Late VAT Registration

AED 20,000

4. Fine for late VAT deregistration

AED 10,000

5. Failing to inform FTA of changes in tax records which needs submission

AED 5,000 at the first instance

AED 15,000 in case of repeated infraction

6. Tax return fine late filing/late VAT returns fine (Failing to file VAT return within the particular time)

AED 1,000 for the first instance

AED 15,000 for subsequent infraction

7. Penalty for late VAT payment: In case of non-payment of tax as stated in the tax return form within the stated time frame as specified by the tax law 

The penalties will be as follows

  • 2% of unpaid tax is due instantly
  • 4% is to be paid on the seventh day following the deadline for payment
  • A daily penalty of 1% is charged for any amount unpaid after a month of the deadline of payment, up to a maximum of 300% can be charged

8. Penalty for Incorrect VAT return filing

In this case, two penalties are applied

  • A fixed penalty of AED 3,000 for the first instance and AED 5,000 for the subsequent infraction
  • Percentage based penalty can also be applied on the unpaid amount due to the following errors

a) 50% if the registrant does not voluntarily disclose, or in case of voluntary disclosure after being notified of the tax audit and the starting of the tax audit process, or after asking for information regarding tax audit, whichever happens first.

b) 30% while the registrant makes a voluntary disclosure after being notified by the authorities of the tax audit, or before the tax audit starts

c) 5% while the registrant makes a voluntary disclosure before the tax audit

9. VAT voluntary disclosure submission in case of errors in the tax return or tax audit

In this case, two penalties are applied

  • A penalty of AED 3,000 for the first instance and AED 5,000 for the subsequent infraction
  • Percentage based penalty on the unpaid amounts are as follows

a) 50% if the Taxpayer makes the disclosure (i) after being notified of tax audit and the Authority has started the process (ii) they being asked for information relating to a tax audit.

b) 30% if the Taxpayer discloses after the start of tax audit; after being notified of the tax audit

c) 5% if the taxpayer makes a voluntary disclosure before being notified of tax audit

10. Non-disclosure of errors in a tax return or tax refund before a tax audit

In this case, two penalties are applied

  • AED 3,000 for the first instance and AED 5,000 in case of subsequent infraction
  • 50% of the unpaid amount to the authority

11. Failure to assist the work of the FTA tax auditor

AED 20,000

12. Incorrect Tax invoice format

AED 5,000 for incorrect simplified tax invoice

AED 10,000 for incorrect full tax invoice

13. Failure to account tax due on import goods as suggested by the tax law

50% of unpaid or undeclared tax

14. Non-display of prices on the tax invoice

AED 15,000

15. Non-notification to the FTA about applying tax based on margin

AED 2,500

16. Non complying with the suggested procedures for goods transfer in designated zones

A penalty of AED 50,000 or higher, or 50% of the tax on unpaid goods as a result of the violation.

17. Non-issuing tax invoice or alternative document while making supplies

AED 5,000 for each of the missing documents and tax invoice

18. Non-issuing of a tax credit note or alternate documents

A penalty of AED 5,000 for each missing tax credit note or alternative document

19. Non-compliance with the conditions and procedures regarding the issue of an electronic tax invoice and electronic tax credit notes

A penalty of AED 5,000 for each incorrect document.

VAT fine and Penalty Waiver

In case your company gets charged with any of the following VAT fines, our tax experts at Beyond Numbers will assist you in completely waiving off these fines and penalties. We at Beyond Numbers can help waive off your VAT fines. Beyond Numbers contains a group of registered tax consultants and we can help you take care of all your concerns related to VAT. We also advise you in the slightest change in VAT rules and regulations.

Beyond Numbers can help you in VAT Fines and Penalties in UAE , Call us today for a free consultation on +971 50 452 0632

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