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The fundamentals of VAT in the UAE

VAT Penalties in the UAE

What happens if I miss a VAT deadline?

The Emirati Federal Tax Authority approved a set of charges penalizing businesses who violate tax laws. These penalties range between 500 AED and the triple amount of the tax values.

Below you will find a list of the administrative penalties related to the violation of tax procedures, VAT, and excise tax.

  • Not keeping the required records specified by the tax:
    • 10,000 AED for the first violation.
    • 50,000 AED for every repeated violation.
  • Not submitting the required records in Arabic when requested: 20,000 AED.
  • Not submitting a registration application within the specified timeframe: 20,000 AED.
  • Not submitting a deregistration application within the specified timeframe: 10,000 AED.
  • Not informing the Authority of an amendment to tax records that needs to be submitted:
    • 5,000 AED for the first time.
    • 15,000 AED for each repeated violation.
  • Not notifying the Authority of an appointed representative for the business within the specified timeframe:
    • The representative will be charged 1,000 AED the first time.
    • The representative will be charged 2,000 AED if the violation is repeated within 24 months.
  • Not submitting tax return within the specified timeframe:
    • 1,000 AED the first time.
    • 2,000 AED if the violation is repeated within 24 months.
  • Not paying the tax indicated in the tax return within the timeframe:
    • 2% of the unpaid tax is immediately due.
    • 4% of the unpaid tax is due one week following the deadline of the payment.
    • 1% of the tax is charged for a tax amount that is still unpaid one month after the deadline of the payment up to a maximum of 300%.
  • Submitting incorrect tax returns:
    • Fixed penalties:
      • 3,000 AED for the first time.
      • 5,000 AED in case of repeated violations.
    • Percentage-based penalties:
      • 50% if the registrant does not make the disclosure voluntarily or if they make the disclosure only after they are notified by the tax Authority that already started the tax audit process.
      • 30% if the registrant makes a voluntary disclosure after being notified of the tax audit and before the Authority starts the tax audit process.
      • 5% if the registrant makes a voluntary disclosure before being notified by the Authority of the tax audit.
  • Voluntarily disclosing errors in a tax return, tax assessment, or refund application:
    • Fixed penalties:
      • 3,000 AED for the first time.
      • 5,000 AED in case of repeated violations.
    • Percentage-based penalties:
      • 50% if the taxpayer discloses the error after they have been notified by the Authority that already started the audit process or if they have been asked for information related to the tax audit.
      • 30% if the taxpayer makes a voluntary disclosure after being notified by the Authority but before the start of the audit process.
      • 5% if the taxpayer makes a voluntary disclosure after being notified of the tax audit by the Authority.
  • Failure to voluntarily disclose errors in a tax return, tax assessment, or refund application before the tax audit:
    • Fixed penalties:
      • 3,000 AED for the first time.
      • 5,000 AED for repeated violations.
    • 50% of the unpaid amount is owed to the Authority due to the error.
  • Not facilitating the work of the tax auditor: 20,000 AED.
  • Registrant failing to calculate tax on behalf of another party as required under the tax law.
    • 2% of the unpaid tax amount charged immediately.
    • 4% of the unpaid tax amount charged one week following the payment deadline.
    • 1% of the unpaid tax amount charged daily following one month of the payment deadline, up to a maximum of 300%.
  • Not accounting for tax due on import of goods as required by the Authority: 50% of the unpaid or undeclared tax.
  • Registrants not displaying prices inclusive of tax: 15,000 AED.
  • Registrants failing to notify the Authority of applying tax based on the margin: 2,500 AED.
  • Not complying with the conditions and procedures related to transferring goods in designated zones: Higher than 50,000 AED or 50% of the tax.
  • Not issuing a tax invoice or an alternative document when making a supply: 5,000 AED for each missing tax invoice or alternative document.
  • Not issuing a tax credit note or an alternative document: 5,000 AED for each missing credit note or alternative document.
  • Not complying with the conditions and procedures related to issuing electronic tax invoices and electronic tax credit notes: 5,000 AED for each incorrect document.
  • Not displaying prices inclusive of tax: 15,000 AED.
  • Not complying with the conditions and procedures related to excise goods’ transfer in designated zones: Higher than 50,000 AED or 50% of the tax amount.
  • Not providing the Authority with a price list for the produced, imported, or sold excise goods:
    • 50,000 AED for the first time.
    • 20,000 AED for repeated violations.
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