In the previous article, we discussed the administrative penalties (commonly referred to as VAT penalties) applicable under the Federal VAT Act. In addition to these administrative penalties, the Federal Tax Procedure Act also defines certain violations and their corresponding penalties. These will also have an impact on those who register under VAT in the UAE. Let us discuss these violations and their corresponding administrative penalties under UAE VAT.

Violation of Administrative Penalty (AED)

1. The operator failed to keep the required records and other information in accordance with the “Tax Law” and “Tax Law 10,000” for the first time

50,000 if repeated

2. Business personnel failed to submit tax data, records and documents related to Arabic to the free trade agreement as required 20,000

3. The taxable person fails to submit an application for registration within the time limit specified in the Tax Law 20,000

4. The registrant fails to submit a cancellation application within 20 working days after the occurrence of an event that requires cancellation 10,000

5. The registrant has failed to notify the FTA of any circumstances that need to modify the information in the tax records first saved by FTA 5,000

15,000 repetitions

6. The person appointed as the legal representative of the taxable person fails to notify the FTA of his appointment within 20 working days from the date of appointment. The fine will come from the legal representative’s funds of 20,000

7. The legal representative designated as the taxpayer fails to submit the tax return within 28 months after the end of the tax period. The fine will come from the legal representative’s funds 1,000 for the first time

If repeated within 24 months, 2,000

8. The registrant fails to file the tax return for the first time within 28 days of the second month after the end of the tax period

If repeated within 24 months, 2,000

9. The taxable person fails to settle the tax payable within 28 days of the second month after the end of the tax period in the tax return submitted or tax assessment notified to him/her

a. 2% of unpaid taxes, due immediately after the due date

b. 4% of unpaid taxes should be paid on the 7th day after the payment deadline

c. From one calendar month after the payment deadline, a daily fine of 1% will be imposed on unpaid taxes, up to a maximum of 300% of unpaid taxes

10. Submitting wrong tax returns will be subject to two penalties:

Fixed penalty: 3,000 for the first time

5,000 if repeated

b. Percentage-based fines: If the registrant fails to voluntarily disclose after being notified of the tax audit and the audit process or after being required to provide information about the tax audit, 1.50% of the unpaid amount shall prevail. If the registrant voluntarily disclosed after receiving the tax audit notice and before the free trade agreement starts the tax audit, it will account for 2.30% of the unpaid amount. If the registrant voluntarily disclosed before the FTA notified the tax review, 3.5% of the unpaid amount

11. Taxpayers voluntarily disclose tax returns, and errors in tax assessment or tax refund applications are the same as above

12. If the taxable person fails to voluntarily disclose his tax return before notifying him that he will undergo a tax audit, the following two penalties will apply to errors in tax assessment or refund application:

Fixed penalty:

3,000 for the first time

5,000 if repeated

b. 50% of the unpaid amount

13. People engaged in business activities fail to facilitate the work of tax auditors 20,000

14. The registrant fails to pay taxes on behalf of others, even though he/she is obligated to do so

a. 2% of unpaid tax, once the tax deadline has passed

b. 4% of unpaid taxes should be paid on the 7th day after the payment deadline

c. From one calendar month after the payment deadline, a daily fine of 1% will be imposed on unpaid taxes, up to a maximum of 300% of unpaid taxes

15. Those who do not pay the tax payable for imported goods have not paid or failed to declare 50% of the tax

Obviously, violations and violations under VAT will attract strict measures in the UAE. Taxpayers should ensure that they avoid the above-mentioned violations of the law, so as not to suffer huge fines if they do not comply with the regulations.