VAT returns are to be submitted by VAT registered businesses in UAE no later than 28th day from the end of a tax period in which is also the settlement of net VAT payment deadline, if applicable. Due date of VAT return filing and corresponding payment can fall on a UAE official public holiday or on a weekend. In such cases, VAT return filing in UAE and payment of VAT dues will be extended onto the next business day.
As per the tax authority’s regulations, there are consequences to the late filing of VAT returns in UAE with the FTA, as well as for other violations in relation to VAT legislation. Here are the administrative penalties:
- Late filing of VAT returns (failure in filing VAT returns within the FTA-specified time period) – Dhs 1,000 for the first offense and Dhs 2,000 for the second offense within 24 months of committing the previous violation.
- Late payment of VAT (failure in paying the VAT that is due to the FTA within the timeframe specified by VAT regulations) – 2 percent of unpaid tax that’s due; 4 percent of unpaid tax on 7th day following VAT payment deadline; 1 percent daily penalty to be charged to VAT registered business for unpaid tax 1 calendar month following VAT payment deadline (maximum penalty of 300%).
- Filing of inaccurate VAT return (two penalties apply for errors in VAT return of a VAT registered business – Dhs 3,000 for the first offense and Dhs 5,000 for the second offense in the event of a repeated violation. A penalty that’s percentage based may apply for certain errors e.g. 50 percent if VAT registered business doesn’t make voluntary disclosure of error/made voluntary disclosure of errors only after the tax authority has notified the business; 30 percent, if VAT registered business has made a voluntary disclosure following FTA, provided notification regarding a VAT audit and the FTA hasn’t started the VAT audit yet; 5 percent if VAT registered business voluntarily discloses error in VAT return submitted prior to the FTA notifying the business of a VAT audit.
- Failure in disclosing mistakes in VAT returns submitted to the FTA voluntarily prior to an ordered VAT audit – a Dhs 3,000 fixed penalty for first offense and Dhs 5,000 for second or repeated violation; and 50 percent of the unpaid tax that is due to the FTA from the mistake in the VAT return.
- Failure of VAT registered business to facilitate work of auditor appointed by FTA – Dhs 20,000 penalty
- Failure to follow the correct format for VAT invoicing – Dhs 5,000 if incorrect tax invoice (simplified) was raised and Dhs 20,000 for incorrect tax invoice (full)
- Failure in accounting tax due for products import as per the VAT legislation – 50 percent of undeclared or unpaid taxation
- Failure in displaying prices that should be on invoices for VAT – Dhs 15,000
- Failure in notifying FTA for application of tax based on margin – Dhs 2,500
- Failure in complying with procedures and conditions in relation to goods transfer for designated zones in UAE – penalty is higher than Dhs 50,000. If applicable, penalty maybe 50 percent of tax unpaid for products as result of this violation
- Failure in the issuance of a tax invoice when making a transaction or supply – Dhs 5,000 for every tax invoice that is missing (can be an alternative document)
- Failure in the issuance of tax credit notes – Dhs 5,000 for every tax credit note that is missing (can be an alternative document)
- Failure in complying with procedures and conditions in relation to the issuance of an e-taxation invoice or e-tax credit note – Dhs 5,000 for every incorrect document
A Team of VAT Specialists
In order to help VAT-registered business in UAE comply with their tax obligations, VAT Registration UAE provides VAT services. We understand the value that we’re able to provide clients is value that’s from the regulated tax agents in Dubai in which we employ.
Our team is comprised of seasoned tax experts and accountants with extensive knowledge and experience in the industry. With over three decades in providing international taxation guidance, you can count on our specialists’ expertise. Call us today should you wish to book a consultation with our VAT team.
What are the Services of a Regulated Tax Agent in Dubai?
A regulated tax agent in Dubai will be able to help with: VAT advisory and VAT compliance, including for international and local transactions; VAT refunds; VAT reclaim; VAT management; VAT return filing; VAT compliance with statutory requirements; VAT registrations; and VAT communication with FTA.
How can a Business Comply with VAT Obligations?
VAT obligations can be a burden to businesses, especially ones that are starting out. If you want to minimize the risk of your business acquiring penalties from the FTA, we suggest you work with VAT specialists.