VAT Penalty

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Auditing - People process technology
Auditing - People process technology

VAT Fines in UAE For Non-Registration

If a VAT eligible business in the UAE fails to register on the FTA portal within the specified timeline, they will have to pay a penalty of Dh20,000.

A penalty of Dh10,000 shall be applicable to those registrants who fail to submit deregistration applications within the specified timeframe.

Penalty on Late Filing of Return/Tax

As per the UAE tax laws, businesses with annual turnover of more than Dh150 million are required to file monthly returns, while those with turnover less than Dh150 million will only have to file returns and pay taxes on a quarterly basis.

If a VAT registrant fails to file a tax return within the specified timeline, he will pay Dh1,000 in fine for the first offense and Dh2,000 for repetition within 24 months.

If a taxable person fails to pay taxes within the timeframe, he shall pay a penalty of:

  • (2%) of the unpaid tax if the payment of Payable Tax is made within seven days after the deadline;
  • (4%) of the unpaid tax on the seventh day or beyond following the deadline for payment;
  • (1%) daily penalty (not more than 300%) on due tax amount if the tax is still unpaid one month following the payment deadline.

Penalty on Non-disclosure of Tax Due on Imports

If a taxpayer fails to account for any due tax on import of goods as per the law, he will have to pay a penalty of 50% of the unpaid tax.

Penalty on Submission of Incorrect Tax Return or Non-disclosure of Errors in tax returns

If a taxpayer fails to voluntary disclose errors in the returns filed by him, he will incur a fine of Dh3,000 the first time and Dh5,000 for repeated offence. If a taxpayer voluntary discloses errors but provides incorrect information, they will be liable to pay a penalty of Dh3,000 the first time and Dh5,000 on repetition.

Penalty on Wrong Pricing of Items

In case if a business doesn’t display the right prices of items inclusive of the excise tax, they may have to pay a fine of Dh15,000 to the authorities.

The rules also state that the taxable goods must be kept in a designated zone as per the conditions and procedures specified for it, otherwise there will be a penalty of Dh50,000 on non-compliance of any of the rules.