How to Avoid VAT Late Payment Penalties in the UAE?

For VAT purposes, Taxable Persons in the United Arab Emirates are required to submit a VAT return to the Federal Tax Authority at the end of each fiscal year, this process is called VAT filing. The value of a taxable person’s supplies and purchases during the tax period is described in a VAT return, along with the taxable person’s VAT liability. Thus, to avoid late payment of VAT and to ensure compliance, Taxable Persons are advised to seek the services of “VAT Registration UAE”, a trusted partner for all tax matters. Book a consultation now.

Penalties for VAT Late Payments

Penalties for late filing of VAT include:

  1. A first-time offence carries a 1000 AED fine.
  2. If the offense is committed again within 24 months, the fine rises to AED 2000.

A penalty for VAT late payment apply when the tax as mentioned in the tax return form is not paid within the time frame allowed by the tax rules. The following fees will be assessed for late VAT payments:

  1. The unpaid Tax in the amount of 2% will be required.
  2. After one month from the payment due date, and on the same day each following month after that, a 4% annual penalty on the unpaid Tax amount to date will be required.

The UAE Value Added Tax significantly contribute to the expansion of the country’s revenue streams and helps the local economy. In essence, firms must file their VAT returns on time. The Federal Tax Authority imposes significant fines on enterprises for non-compliance and delays on VAT filing. Therefore, it is advisable for businesses to consult trusted VAT Consultants in UAE to successfully navigate the complexities of tax filing and to fully ensure compliance with the Value Added Tax regulations.

Read More: Consequences Of Late Filing Of VAT Return In UAE

How Can Businesses Avert VAT Penalties in the UAE?

Businesses can avoid late filing by ensuring that they are filing the returns and due VAT within the stipulated period. VAT fines can be avoided by upholding the following:

  1. It is crucial to confirm that the supplier appropriately charges taxable goods and that information is included in the invoice when purchasing goods or receiving services.
  2. Ensuring payment of the Tax that was correctly invoiced within the time frame specified by the government.
  3. VAT returns must be filed within the given time frame and contain all necessary information to avoid incurring a late filing penalty.

Read Also: How To Reduce VAT Penalties In UAE

11 Tips to Avoid Penalties for Late VAT Filing in the UAE

Below are key tips to avoid penalties for late VAT filing:

  • Maintain Accurate Financial Records: Maintaining accurate financial records is essential for timely VAT reporting. To ensure accurate VAT computations, make sure all transactions are accurately recorded with supporting documentation.
  • Invest in efficient accounting software that can automate VAT computations and reporting. The UAE’s VAT requirements are taken into account by many contemporary accounting software systems, simplifying compliance.
  • Consider employing a tax expert or VAT consultant who is knowledgeable about UAE tax regulations. They can guide you through the difficulties of VAT compliance and guarantee on-time submission.
  • Create a calendar for VAT filing that includes due date reminders. By doing so, you will keep organized and make sure your VAT returns are submitted on time.
  • Regularly reconcile your accounts to make sure that your financial statements and VAT records are in agreement. Any differences should be looked into and fixed right away.
  • Make a plan: Prepare in advance for VAT payments. To prevent late payment fees, save aside money for VAT responsibilities.
  • Early Return Submission: Wait to file your VAT returns until the last minute. To allow for any potential technical difficulties or delays, submit them well before the deadline.
  • Review and Audit: To find and address any potential compliance concerns, conduct routine internal reviews and audits of your VAT processes.
  • Stay Informed: Keep abreast of any modifications to the FTA’s VAT legislation and recommendations. To keep up with any updates, if necessary, attend seminars or training sessions.
  • If you control many firms jointly, take into account the possibility of VAT grouping. Enabling group members to submit a single VAT return can streamline the VAT compliance process.
  • Seek Professional counsel for Complex Transactions: To ensure compliance with VAT legislation, take into consideration seeking professional counsel for complex transactions or those involving foreign trade.

How “VAT Registration UAE” can assist?

VAT Registration UAE, a trusted partner in VAT matters, assists Taxable Persons to effectively maintain tax records and accounting practices in compliance with the statutory VAT regulations. Thus, businesses are advised to avail the expert services of VAT Registration UAE. So, contact us today and we shall be glad to assist you.