In a previous article, we discussed the administrative penalties (commonly known as VAT penalties) that apply under the Federal Decree-Law on VAT. In addition to these penalties, the Federal Tax Procedures Law also defines certain violations and their respective penalties that will impact VAT Registration registrants in the UAE. Let’s examine these violations and corresponding administrative penalties under VAT Registration UAE
Offense
Fine (AED)
Failure by a business to maintain required records and other information per the Tax Procedures Law and Tax Law.
10,000 first time; 50,000 for repeat offense
Failure by a business to provide requested data, records and documents related to tax in Arabic to the FTA online.
20,000
Failure by a Taxable Person to submit a registration application within the timeframe in the Tax Law.
20,000
Failure by a registrant to submit a deregistration application within 20 business days after an event requiring deregistration.
10,000
Failure by a Registrant to notify the FTA VAT Registration of any circumstance requiring amendment of information in the Tax Records.
5,000 first time; 15,000 for repeat offense
Failure by an appointed legal representative to inform the FTA online of appointment within 20 business days. Penalty from representative’s funds.
20,000
Failure by an appointed legal representative to file a tax return by the 28th of the month after the tax period. Penalty from representative’s funds.
1,000 first time; 2,000 if repeated within 24 months
Failure by a registrant to submit the Tax Return by the 28th after the tax period.
1,000 first time; 2,000 if repeated within 24 months
Failure to settle tax invoice format uae payable on a submitted return or assessment by the 28th after the tax period.
2% of unpaid tax immediately; 4% after 7 days; 1% daily after 1 month up to 300%
Submission of an incorrect tax return.
Fixed 3,000 first time; 5,000 for repeat offense. Percentage based on disclosure timing.
Voluntary disclosure of errors before audit notification.
Same as above.
Failure to voluntarily disclose errors before audit notification.
Fixed 3,000 first time; 5,000 for repeat offense. 50% of unpaid amount.
Failure to facilitate tax auditor’s work.
20,000
Failure by a Registrant to pay tax on behalf of another when obligated.
2% immediately; 4% after 7 days; 1% daily after 1 month up to 300%
Not accounting for tax invoice due on imported goods.
50% of unpaid or undeclared tax
It is evident that noncompliance under VAT Registration in the UAE will lead to strict penalties. Taxpayers must avoid these violations to steer clear of huge fines for noncompliance.
