If you are a VAT-registered person, you are required to follow the rules and regulations set by the Federal Tax Authority. If you fail to do so, you will have to pay the corresponding penalties as mentioned below:
The penalty for Non-Registration: If a business eligible for VAT registration fails to register on the FTA portal within the required timeframe, they will have to pay a penalty amounting to AED 20,000.
Penalty on Late Filing Return: If a VAT registrant fails to file a tax return within the specified timeline, he will pay AED 1,000 in fine for the first offense and AED 2,000 for repetition within 24 months.
Penalty on Late Payment: If you fail to pay your VAT liability on the deadline, a penalty amounting to 2% of the unpaid tax is immediately due; then 4% of the unpaid tax is due on the seventh day following the deadline and 1% daily penalty is due if still unpaid one calendar month after the deadline (maximum of 300%)
Penalty on Incorrect Tax Return: AED 3,000 for the first time and AED 5,000 on repetition for their mistake or error in tax record
Penalty on Non-maintenance of Accounting Records: If a business fails to keep or maintain proper tax record, then they need to pay fine AED 10,000 for the first offense and AED 50,000 on repetition.
Other penalties are as follows:
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