VAT Fines and Penalties in UAE VAT Fines and Penalties in UAE Since implementation of VAT 3 years ago, risk factors have increased due to the VAT fines and penalties that your business will be eligible in case of not abiding all the rules and regulations of FTA. Companies will face consequences in the form of the heavy FTA VAT Fines if the breach VAT laws in UAE. Organizations must ensure VAT compliance as per FTA. To avoid FTA VAT penalties and fines, hire MHM VAT Experts and grow your business smoothly. MHM Accounting is one of the approved tax experts in UAE. Our experts will assist you in implementing VAT and assure VAT compliance by avoiding VAT fines. If your company unfortunately received a fine from FTA, MHM Accounting will help you to waive off FTA VAT fines. List of VAT fines and penalties: Here is the list of administrative penalties and fines for VAT LAW non-compliance: 1. Failure to keep the required financial records such as tax invoices and books of accounts specified in the tax law. • AED 10,000 for the first time. • AED 50,000 for each repeat violation. 2. Failure to submit the documents in Arabic when requested by the FTA. • AED 20,000 3. Late VAT registration fine. • AED 20,000 4. Late VAT De-registration fine. • AED 10,000 5. Failure to inform FTA for any changes in tax records that needs to be submitted. • AED 5,000 for the first time • AED 15,000 in case of repetition. 6. Late filing of tax return fine / Late VAT return fine. (Failure to file VAT return within specified time). • AED 1,000 for the first time • AED 2,000 in case of repetition within 24 months. 7. Late VAT payment penalty: Failure to pay the tax stated in the tax return form within the timeframe specified by the tax law. Late VAT payment penalty will be as follows: • 2% of the unpaid tax is due immediately. • 4% is due on the seventh day following the deadline for payment. • 1% daily penalty will be charged on any amount that is still unpaid one calendar month after the deadline for payment, up to a maximum of 300%. 8. Filing of incorrect VAT return penalty • Two penalties are applied: • Fixed penalty of: i. (AED 3,000) for the first time ii. (AED 5,000) in case of repetition • Percentage-based penalty shall be applied on the amount unpaid to the Authority due to the error as follows: i. (50%) if the Registrant does not make a voluntary disclosure or he made the voluntary disclosure after being notified of the tax audit and the Authority has started the tax audit process, or after being asked for information relating to the tax audit, whichever takes place first. ii. (30%) if the Registrant makes a voluntary disclosure after being notified of the tax audit and before the Authority starts the tax audit. iii. (5%) if the Registrant makes a voluntary disclosure before being notified of the tax audit by the Authority. 9. Submission of VAT Voluntary disclosure by a business in case of errors in a tax return or tax refund. • Two penalties are applied: i. Fixed penalty of: a. (AED 3,000) for the first time. b. (AED 5,000) in case of repetition ii. Percentage-based penalty shall be applied on the amount unpaid to the Authority due to the error as follows: a. (50%) if the Person/Taxpayer makes the disclosure after either of the following conditions applies: (1) they have been notified of the tax audit and the Authority has started the audit process, or (2) they have been asked for information relating to the tax audit. b. (30%) if the Person/Taxpayer makes a voluntary disclosure after being notified of the tax audit but before the start of the tax audit. c. (5%) if the Person/Taxpayer makes a voluntary disclosure before being notified of the tax audit by the authority. 10. Failure to voluntarily disclose errors in a tax return or tax refund application before a tax audit. • Two penalties are applied: i. Fixed penalty of (AED 3,000) for the first time b. (AED 5,000) in case of repetition ii. 50% of the amount unpaid to the authority due to the error. 11. Failure to facilitate the work of FTA tax auditor. • AED 20,000 12. Following incorrect Tax invoice format. • AED 5,000 for raising incorrect simplified tax invoice. • AED 10,000 for raising incorrect full tax invoice. 13. Failure to account for tax due on import of goods as required under the tax law. • 50% of unpaid or undeclared tax. 14. Failure to display prices on tax invoice inclusive of tax. • AED 15,000 15. Failure to notify the FTA of applying tax based on the margin. • AED 2,500 16. Failure to comply with conditions & procedures related to the transfer of goods in designated zones. • The penalty will be the higher of AED 50,000 or 50% of the tax, if any, unpaid on the goods as the result of the violation. 17. Failure to issue a tax invoice or alternative document when making any supply. • AED 5,000 for each missing tax invoice or alternative document. 18. Failure to issue a tax credit note or alternative document. • AED 5,000 for each missing tax credit note or alternative document. 19. Failure to comply with the conditions & procedures regarding the issuance of electronic tax invoices and electronic tax credit notes. • AED 5,000 for each incorrect document. VAT fine and penalty waiver If your company has been charged with any of the VAT fines, MHM VAT experts will assist you in reducing of completely waive off those fines and penalties. We will help you in waive off VAT fines. Contact us now for free VAT consultation.