What happens if I do not comply with the UAE VAT Law?

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:

  • Failure in submitting VAT deregistration: AED 10,000
  • Failure in Displaying Prices Inclusive of VAT: AED 15,000
  • Failure in producing proper tax data, records and documents in Arabic: AED 20,000
  • Failure in notifying the authority of applying tax based on the margin: AED 2,500
  • Non-disclosure of tax due on imports: 50% of the unpaid tax
  • Failure in issuing a tax invoice or any alternative document when making any supply: AED 5,000 for each alternative document or tax invoice
  • Failure in issuing a tax credit note or an alternative document: AED 5,000 for each
  • Failure in following the conditions and procedures in issuing electronic tax invoices and tax credit notes: AED 5,000 for each incorrect document

BMS Auditing Chartered Accountants is one among the Top most Influential and Leading Professional Service providers that has an outstanding reputation in terms of providing VAT-related services in GCC countries (UAE, KSA, and Bahrain).

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BMS AUDITING & CONSULTING CO. Suite No.1001, 10th floor, Smart Height, Dubai, United Arab Emirates PH: +971 45516399 | MOB : +971 555569829 info@bmsauditing.com | contact@bmsauditing.com

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