VAT Penalties

1. Failure to keep required financial records as required by tax law, such as tax invoices and accounting records.

AED 10 000 for the first time.

AED 50 000 for each repeated offence.

2. Failure to provide documents in Arabic upon request by the FTA.

AED 20 000

3. fine for late VAT registration.

AED 20 000

4. penalty for late cancellation of VAT registration.

AED 10 000

5. Failure to inform the FTA of any changes in the tax documents to be submitted.

AED 5 000 for the first time.

AED 15 000 in case of repetition.

6. Penalty for late submission of tax return / Penalty for late submission of the VAT return. (Failure to submit a VAT return within the time limit).

AED 1000 for the first time.

AED 2000 if repeated within 24 months.

7. Late payment of VAT penalty; Failure to pay the tax specified in the tax return form within the time limit prescribed by tax law. The penalty for late payment of VAT is as follows:

2% of the unpaid tax is due immediately.

4% is due on the seventh day after the due date.

A penalty of 1% per day, up to a maximum of 300%, will be charged on the amount outstanding one calendar month after the due date.

8. Penalty for incorrect submission of VAT returns

Two penalties apply:

Fixed penalty:

1. (AED 3000) for the first time
2. (AED 5000) if the offence is repeated.

The Authority shall apply the following percentage penalty to the amount outstanding due to the error:

1. (50%) where the Registrant has failed to provide voluntary information or has provided voluntary information after being notified of the tax audit and the Authority has commenced the tax audit process or after being requested for information in connection with the tax audit, whichever occurs first. b. (30%) where the Registrant has provided voluntary information after being notified of the tax audit and before the Authority has commenced the tax audit process.
2. (5%) if the Registrant makes voluntary disclosures before being notified of a tax audit by the Authority.
3. voluntary disclosure of VAT by a company where errors have been made in a tax return or tax refund.

Two penalties apply:

Fixed penalty:

1. (AED 3000) for the first time.
2. (AED 5 000) for repetition.

A percentage penalty shall be applied to the amount outstanding to the Authority as a result of the error as follows:

1. (50%) if the Person/taxpayer discloses the information after one of the following conditions has been met: (1) it has been notified of the tax audit and the Authority has commenced the audit process; or (2) it has been requested for information in connection with the tax audit. b. (30%) if the Person/taxpayer voluntarily discloses the information after being notified of the tax audit but before the tax audit has commenced.
2. (5%) if the Person/taxpayer voluntarily discloses the information before the authority is notified of the tax audit.
3. Voluntary non-disclosure of errors in a tax return or tax refund application before the tax audit commences.

Two penalties apply:

1. Fixed penalty (AED 3000) for the first
2. (AED 5,000) for repetition.

50% of the amount not paid to the authority due to the error.

11. Failure to promote the work of the FTA tax auditor.

AED 20 000

12. Incorrect tax invoice format.

AED 5 000 for issuing an incorrect simplified tax invoice.

AED 10 000 for issuing an incorrect full tax invoice.

13. Failure to account for tax payable on the importation of goods in accordance with the requirements of the tax legislation.

50 % of the unpaid or undeclared tax.

14. failure to state the prices on the tax invoice inclusive of tax.

AED 15 000

15. Failure to notify the FTA of the imposition of tax on the basis of the difference.

AED 2 500

16. Failure to comply with the conditions and procedures relating to the movement of goods within the designated zones.

The penalty will be the higher of AED 50 000 or 50% of the unpaid tax, if any, on the goods as a result of the offence.

Failure to issue a tax invoice or alternative document upon delivery.

AED 5 000 for each missing tax invoice or alternative document.

Failure to issue a tax credit document or alternative document.

AED 5 000 for each missing tax credit invoice or alternative document.

Failure to comply with the conditions and procedures for the issue of electronic tax invoices and electronic tax credit invoices.

AED 5 000 for each incorrect document.