Administrative Penalties in the UAE

December 29, 2021Dated:  | |

Administrative Penalties are the monetary penalties imposed on a person for breaching the provisions of the UAE VAT (Value Added Tax) laws. VAT was introduced in the UAE on 1 January 2018 for the supply of goods and services in the country whereby any person conducting business in the UAE is required to register for VAT as per the provisions charted by the tax authorities.

The VAT penalties incurred varies according to the number and nature of the violations committed and are as follows:

01. Violations and respective penalties related to the implementation of Tax Procedure Laws

  • Failure of the Taxable person to keep required records and other information:

 10,000 AED for the first time and 50,000 AED in case of repetition.

  • Failure of Taxable person to submit the required documents in Arabic when requested:

20,000 AED

  • Failure of Taxable person to submit a registrant application within the specified time:

20,000 AED

  • Failure of a registrant to submit the deregistration application within the timeframe:

10,000 AED

  • Failure of a registrant to inform the authority about amendments in the information provided:

5,000 AED for the first time, 15,000 AED in case of repetition.

  • Failure of the person appointed as legal representative to inform the authority on their appointment:

20,000 AED (due from the legal representative’s own fund)

  • Failure of the person appointed as legal representative to file a Tax Return within the specified time frame:

1,000 AED for the first time, 2,000 AED in case of repetition within 24 months (due from the legal representative’s own fund)

  • Failure of a registrant to submit the Tax Return within the specified timeframe:

 1,000 AED for the first time, 2,000 AED in case of repetition within 24 months

  • Failure of Taxable person to settle the payable tax stated in Tax Return within the specified timeframe:

A late payment penalty consisting of a 2% of the unpaid tax due immediately, a 4% due on the seventh day following the deadline, and a 1% daily penalty due for any amount unpaid after one calendar month following the deadline with an upper ceiling of 300%

  • Submission of incorrect Tax Returns:

1) A fixed penalty of 3,000 AED for the first time and 5,000 AED in case of repetition. 2) A percentage penalty of 50% if the registrant does not make a Voluntary Disclosure or made only during the tax audit process, a percentage penalty of 30% if the registrant has made the Voluntary Disclosure after being notified of the tax audit and before the start of the tax audit, a percentage penalty of 5% if the registrant makes a Voluntary Disclosure before the tax audit.

  • Failure of Taxable person to Voluntarily Disclose the errors in Tax Return:

1) A fixed penalty of 3,000 AED for the first time, 5,000 AED in case of repetition. 2) A percentage penalty of 50% of the tax unpaid due to the error resulting in a tax benefit.

  • Failure of Taxable person conducting business to provide facilities for Tax Auditor:

20,000 AED

  • Failure of a registrant to calculate tax on behalf of another person when obliged to do so:

A late payment penalty consisting of a 2% of the payable tax due immediately, a 4% due on the seventh day following the deadline, and a 1% daily penalty due for any amount unpaid after one calendar month following the deadline with an upper ceiling of 300%

  • Failure to account for any tax due on import of goods:

50% of the unpaid or undeclared tax.

02. Violations and respective penalties related to the implementation of Excise Tax Laws

  • Failure of Taxable Person to display prices inclusive of tax:

15,000 AED

  • Failure to comply with the conditions and procedures related to transfer of Excise goods between Designated Zones, processing and storing of Excise goods:

Penalty shall be higher of 50,000 AED or 50% of the tax, if any, chargeable as a result of the violation.

  • Failure to provide the authority with price lists for the Excise goods produced, imported, or sold thereby:

5,000 for the first time, 20,000 in case of repetition.

03. Violations and respective penalties related to the implementation of Value Added Tax Laws

  • Failure of Taxable Person to display prices inclusive of taxes:

15,000 AED

  • Failure to notify the authority of applying tax based on the margin:

2,500 AED

  • Failure to comply with conditions related to keeping goods in a Designated Zone or moving them to another:

Penalty shall be higher of 50,000 AED or 50% of the tax, if any, chargeable as a result of the violation.

  • Failure to issue the Tax Invoice or an alternative document while making a supply:

5,000 AED for each Tax Invoice or alternative document

  • Failure to issue a Tax Credit note or an alternative document:

 5,000 AED for each credit note or alternative document

  • Failure to comply with t          he conditions and procedures regarding issuance of Electronic Tax Invoices and Electronic Tax Credit notes:

5,000 AED for each incorrect document.

Whilst doing business in Dubai, comprehensive knowledge of the UAE VAT laws and procedures is very important so as to avoid any penalties.  For the past 17 years, Flying Colour Tax consultants and Flying Colour Group have been helping clients in Dubai by providing them with required advice and assistance on tax-related matters. Our experienced tax consultants are ready to clarify all your doubts regarding VAT in the UAE. Please feel free to mail your queries at info@flyingcolour.com or contact us at +971 4 4542366.

Write a comment