New FTA VAT Fines and Penalties in UAE

Revised FTA VAT fines and penalties in UAE

PREVIOUS PENALTY vs NEW PENALTY

1. Late VAT Registration penalty

• Previous penalty –  AED 20,000
• New penalty –  AED 10,000

2. Late VAT De-registration penalty

• Previous penalty – AED 10,000
• New penalty – AED 1,000 in case of delay, and on the same date monthly thereafter, up to a maximum of 10,000.

3. Late VAT return filing penalty

• Previous penalty – AED  1,000 for the first time and AED 2,000 in case of repetition within 24 months.
• New penalty – AED  1,000 for the first time and AED 2,000 in case of repetition within 24 months. (Not amended)

4. Late VAT payment penalty

Previous penalty –

• 2% of the unpaid tax is due immediately.
• 4% is due on the seventh day following the deadline for payment.
• 1% daily penalty will be charged on any amount that is still unpaid one calendar month after the deadline for payment, up to a maximum of 300%.

New penalty – 

• 2% of the unpaid tax is due immediately.
• 4% monthly penalty is due after one month from the due date of payment, and on the same date monthly thereafter, on the unsettled Tax amount to date.

5. Submission of Incorrect tax return by the registrant

• Previous penalty – AED  3,000 for the first time and AED 5,000 in case of repetition.
• New penalty – AED  1,000 for the first time and AED 2,000 in case of repetition.

6. Failure of the business maintaining proper books of accounts (Accounting and Bookkeeping)

• Previous penalty – AED 10,000 for the first time and AED 50,000 in case of repetition.
• New penalty – AED 10,000 for the first time and AED 20,000 in case of repetition.

7. Failure in submitting the data, records and documents related to Tax in Arabic to Authority when requested

• Previous penalty – AED 20,000
• New penalty – AED 20,000 (Not change)

8. Failure to inform the Authority of any circumstance that requires the amendment of the information pertaining to its Tax record kept by Authority

• Previous penalty – AED 5,000 for the first time and AED 15,000 in case of repetition.
• New penalty – AED 5,000 for the first time and AED 10,000 in case of repetition.

9. Failure of the Legal Representative of the Taxable Person to inform the Authority of its appointment as Legal Representative within the specified timeframe, in which case the Penalties will be due from the Legal Representative’s own funds

• Previous penalty – AED 20,000
• New penalty – AED 10,000

10. Submission of a VAT Voluntary Disclosure by Taxpayer on mistakes in the Tax Return or refund application

• Previous penalty – AED  3,000 for the first time and AED 5,000 in case of repetition.
• New penalty – AED  1,000 for the first time and AED 2,000 in case of repetition.

11. Failure of the Person conducting Business to facilitate the work of the Tax Auditor 

• Previous penalty – AED 20,000
• New penalty – AED 20,000 (No change)

12. Person not accounting for any Tax that may be due on the import of goods as per the Tax Law

• Previous penalty – 50% of unpaid or undeclared Tax
• New penalty – 50% of unpaid or undeclared Tax (No change)

13. Failure to show prices on tax invoice inclusive of tax.

• Previous penalty – AED 15,000
• New penalty – AED 15,000 (No change)

14. Failure to inform FTA of applying tax based on the margin.

• Previous penalty – AED 2,500
• New penalty – AED 2,500 (No change)

15. Failure to comply with conditions & procedures related to the transfer of goods in designated zones.

• The penalty will be the higher of AED 50,000 or 50% of the tax, if any, unpaid on the goods as the result of the violation. (No change)

16. Failure to issue a tax invoice or alternative document when making any supply.

• Previous penalty – AED 5,000 for each missing tax invoice or alternative document.
• New penalty – AED 5,000 for each missing tax invoice or alternative document. (No change)

17. Failure to issue a tax credit note or alternative document.

• Previous penalty – AED 5,000 for each missing tax credit note or alternative document.
• New penalty – AED 5,000 for each missing tax credit note or alternative document. (No change)

18. Failure to follow the conditions regarding the issuance of electronic tax invoices and  tax credit notes.

• Previous penalty – AED 5,000 for each incorrect document.
• New penalty – AED 5,000 for each incorrect document. (No change)