Updated VAT Fines and Penalties in the UAE

BRISK will assist you in getting VAT fines Reduced and discounts 

by ensuring tax Compliance

Changes to VAT Fines and Penalties:

The UAE’s Federal Tax Authority (FTA) has reduced previous VAT fines and penalties. The reduction and discount of VAT penalty are intended to mask the effects of COVID-19.

Businesses can review their VAT mistakes this way and make the necessary corrections to avoid paying VAT fines. Below are the differences between FTA’s previous and current VAT fines and penalties. 

Late VAT Registration Penalty:

• Previous Penalty: AED 20,000
• New Penalty: AED 10,000

Late VAT De-registration Penalty:

• Previous Penalty: AED 10,000
• New Penalty: AED 1,000 for the delay, with a monthly penalty of up to AED 10,000

Failure in Maintaining Proper Books of Accounts Penalty:

• Previous Penalty: AED 10,000 for the first time and AED 50,000  for repetition
• New Penalty: AED 10,000 for the first time and AED 20,000 for repetition

Failure to submit to the Authority the requested data, 

records and documents related to Tax in Arabic:

• Previous Penalty:  AED 20,000
• New Penalty: AED 20,000 (unmodified)

Failure to inform the Authority of any circumstance that requires updating the data related to its tax record that the Authority maintains:

• 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

If the tax person’s legal representative doesn’t inform the authority within the set time, penalties will be paid by the representative personally:

• Previous Penalty: AED 20,000
• New Penalty:  AED 10,000

If the tax person’s legal representative doesn’t file the tax return 

on time, penalties will apply:

• 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. (unmodified)

Penalties may apply if the registrant fails to submit the tax

 return within the specified timeframe.

• 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(unmodified)

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
• If you haven’t paid by one month after the deadline, you’ll be charged a penalty of 1% each day on the unpaid amount, up to a maximum of 300%.

New Penalty: 

• 2% of the unpaid tax is due immediately
• The 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.

The registrant submitted the wrong tax return.

• 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

Person/Taxpayer voluntarily discloses errors in a tax return,

 assessment, 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

A person conducting business fails to assist the tax auditor:

• Previous Penalty: AED 20,000
• New Penalty: AED 20,000 (Unmodified)

A person fails to account for import tax as required by law

• Previous Penalty: 50% of unpaid or undeclared Tax
• New Penalty:  50% of unpaid or undeclared Tax (Unmodified)

How Can BRISK help?

BRISK can assist businesses in navigating the new VAT fines and penalties in the UAE by providing support in various aspects:

• Help companies to follow VAT rules in UAE with expert guidance on FTA regulations
• Ensure correct VAT implementation, avoid violations, and fix errors to prevent fines
• Find mistakes, fix them, and help businesses avoid or lower VAT fines
• Check VAT health to find the mistakes, non-compliance, and areas for improvement
• Assist with VAT reconsideration, error rectification, compliance, and fine reduction