Revised Penalties for VAT in the UAE

The UAE Cabinet on 28th April 2021 issued Decision No. 49 of 2021 (Cabinet Decision No. 49 of 2021) to amend certain provisions of the Cabinet Decision No. 40 of 2017 regarding the administrative penalties for VAT in the UAE.

These revised VAT penalties for UAE not only amend the penalties for violations of tax laws (as per Article 25 of the FTP) in the UAE but also allows for a redetermination of some already imposed UAE VAT penalties.

The new FTA resolution revising the penalties for VAT in UAE shall be effective from the 28th of June, 2021 (60 days from the date of issue).

Revised penalties for VAT in the UAE on Tax Procedure:

a)  Failure to keep required records specified.

• • AED 1,000 for the first-time violation.
  • AED 2,000 for repetition violation.

b)      Failure to submit registration application within the specified time:

• • AED 10,000

c)       Failure to submit deregistration application within the specified time:

• • AED 1,000 in case of delay and on the same date per month
  •  Maximum penalty:AED  10,000

d)      Failure to inform the Authority of circumstance that requires amendment of the information.        

• • AED 5,000 for first time
  • AED 10,000 for repetition.

e)      The Legal Representative failing to inform Authority of its appointment:

• • AED  10,000

f)       Failure in settling the Payable Tax stated in the Tax Return or Voluntary Disclosure:

• • Maximum of 300% as late payment penalty  
  • 2% of the unpaid tax due on the day following the due date of payment
  • 4% monthly penalty is due after one month from the due date.

g)      Submission of incorrect Tax Return:

• • AED 1,000 for first time
  •  AED 2,000 for repetition

h)      The submittal of a Voluntary Disclosure on errors in the Tax returns, assessment, or refund application according to Article 10(1) and 10(2):

• • The penalty specified in point (g) and
  • A percentage-based penalty shall also be applied:
  • 5% on the difference where VD is submitted within one year from the due date of submission.
  • 10%, within the second year following the due date.
  • 20%, within the third year
  • 30%, within the fourth year
  • 40%, after the fourth year from the due date.

i)        The failure to voluntarily disclose an error as per Article 10(1) and 10(2) before being notified of FTA’s Tax Audit:

• • A penalty of 50% on the amount of error.
  • A penalty of 4% for every month

j)         The failure to calculate tax on behalf of another person

• • Maximum of 300% as late payment penalty
  • 2% of the unpaid tax is due on the day following the due date of payment
  • 4% monthly penalty is due after one month from the due date

Revised penalties for VAT in the UAE Penalties on Excise Tax:

a)  Failure to display prices inclusive of Tax.

• • AED 5,000

b)  Failure to provide the Authority with the price lists of the Excise Goods

• • AED 5,000 for the first time
  • AED 10,000 for repetition

Revised penalties for VAT in the UAE on Value Added Tax:

a)  Failure to display prices inclusive of Tax.

• • AED 5,000

b)  Failure by the Taxable Person to issue a Tax invoice

• • AED 2,500 for each detected case

c)   Failure to issue a Tax Credit Note or any alternative document

• • AED 2,500 for each detected case

d)  The failure to comply with the conditions and procedures regarding the issuance of a Tax Invoice and a Tax Credit Note electronically.

• • AED 2,500 for each detected case.

Feel free to contact our Tax Advisor today for a quality consultation relating your queries with regards to Revised penalties for VAT in the UAE also VAT Registration in Dubai, UAE.

Please send an inquiry to info@flyingcolour.com or call +971 4 4542366.