The VAT return fines and penalties in the UAE are considerably high. With the filing deadline fast approaching for the next batch of VAT returns, it’s important to make sure that all VAT returns are accurate, error-free and that all due VAT is paid on time.
The violations and administrative penalties related to the Implementation of the Federal Decree Law No. (8) of 2017 on Value Added Tax:
| · Failure to keep required records and documents: | · AED 10,000 (First time)· AED 50,000 (repeat offence) |
| · Failure to display prices inclusive of excise tax: | · AED 15,0000 |
| · Failure by the taxable person to notify the Authority of applying Tax based on the margin: | · AED 2,500 |
| · Failure to issue the Tax Invoice or an alternative when making any supply: | · AED 5,000 for each tax invoice· AED 5,000 additional penalty applies if the taxpayer does not issue an invoice, delivery order, dispatch note, or alternative at the time of the transaction |
| · Failure n to issue a Tax Credit Note or an alternative: | · AED 5,000 for each tax credit note |
| · Failure to comply with the conditions and procedures regarding the issuance of electronic tax Invoices and electronic tax credit notes: | · AED 5,000 for each incorrect document |
| · Failure to comply with conditions and procedures related to keeping the taxable goods in a designated zone or moving them to another designated zone: | · AED 50,000 or 50 percent of tax, whichever is higher, paid on the goods that resulted in the violation |
| · Failure to submit the data, records, and documents related to Tax in Arabic to the Authority when requested: | · AED 20,000 |
| · Failure to submit a registration application within the set timeframe in the Tax Law: | · AED 20,000 |
| · Failure to submit a deregistration application within the set timeframe: | · AED 10,000 |
| · Failure to inform the Authority of any circumstance that requires the amendment of the information relating to his tax records: | · AED 5,000 (first offense)· AED 15,000 (repeat offence) |
| · Failure of the person appointed as a Legal Representative for the Taxable Person to inform the Authority of his appointment within the specified timeframe. The penalties will be due from the Legal Representative’s own funds: | · AED 20,000 |
| · Failure of the person appointed as a Legal Representative for the Taxable Person to file a Tax Return within the specified timeframe. The penalties will be due from the Legal Representative’s own funds: | · AED 1,000 (first offense)· AED 2,000 (repeat offence within 24 months) |
| · Failure to submit the Tax Return within the specified timeframe: | · AED 1,000 (first offense)· AED 2,000 (repeat offence within 24 months) |
| · Failure to settle the Payable Tax stated in the submitted Tax Return or Tax Assessment within the specified timeframe: | Late payment penalty consists of:· 2 percent of the unpaid tax due immediately once the payment is late; · 4 percent is due on the seventh day following the payment deadline on the tax which is still unpaid and; · 1 percent daily penalty charged on any amount still unpaid one calendar month following the payment deadline with an upper ceiling of 300 percent |
| · Failure to voluntarily disclose errors in the Tax Return, Tax Assessment, or Refund Application before being notified of a Tax Audit: | · AED 3,000 fixed penalty for the first time· AED 5,000 for repeat offences plus a 5 percent fine based on the unpaid amount |
| · Failure to facilitate the work of the Tax Auditor in violation of the provisions of Article (21) of the Tax Procedures Law. | · AED 20,000 |