Businesses in the UAE must file VAT returns and make VAT payments by the deadline, typically the 28th day of the month following the tax period. Missing this deadline can result in significant penalties, including both fixed and daily charges. Engaging the expert services of “VAT Registration UAE” can help ensure compliance and timely payment of VAT.
Vat Late Payment Penalty
VAT Returns must be submitted before the deadline, or a penalty of AED 1,000 will be assessed for delays that occur for the first time. If multiple violations occur within 24 months, the fine will be doubled to AED 2,000 for each violation. The FTA may share a tax assessment with an estimate of the owed tax for failure to file a VAT Return by the deadline. Upon the issuance of the tax assessment (where applicable), the Taxable Person will be required to pay any payable taxes assessed, penalties for failure to file a tax return, and late payment penalties.
Fixed Penalty
- First Time Offense: AED 1,000
- Repeated Offense (within 24 months): AED 2,000 per violation
Additional Penalties
- 2% of Unpaid Tax: Due the day after the payment deadline.
- 4% Monthly Penalty: Applied to the outstanding balance, starting one month after the due date.
- 1% Daily Penalty: Accrues from the day following the due date, up to a maximum of 300% of the unpaid tax.
Avoiding VAT Late Payment Penalties
Businesses in the UAE must adopt the following best practices to prevent VAT late payment penalties:
- Maintain Accurate Records: Keep your books up to date.
- Stay Informed: Keep up with any changes in VAT laws and FTA requirements.
- Timely Submissions: Ensure VAT returns are submitted and payments made on time.
- Seek Professional Advice: Consult tax experts or VAT consultants for guidance.
- Use Accounting Software: Invest in VAT accounting software or hire an accountant to assist with compliance.
Other VAT Penalties in UAE
- Late VAT registration or de-registration
- Failure to maintain financial records
- Not submitting documents in Arabic when required
- Filing incorrect VAT returns
- Failing to issue tax invoices or tax credit notes
- Non-compliance with FTA audit requirements
Late VAT payments can affect your business’s profits very significantly. Therefore, it is always advisable to seek help from the VAT consultants in Dubai to ensure that you are making your VAT payments on time.
Read Also: Important Tips to Avoid VAT Late Payment Penalties In The UAE
Other Circumstances Leading to VAT Penalties
Violations of VAT accounting in the UAE include:
- Late VAT registration or de-registration
- Failure to maintain financial records (tax invoices and account books)
- Not submitting documents in Arabic when required
- Filing incorrect VAT returns
- Late VAT payment
- Late filing of tax returns
- Submitting VAT Voluntary Disclosure for errors in tax refunds or returns
- Failing to issue tax credit notes or alternative documents
- Non-compliance with FTA audit requirements
- Following incorrect tax formats
- Failing to disclose errors in tax returns or refunds before a tax audit
- Failing to account for tax on imported goods
- Not notifying the FTA about applying tax based on the margin
- Not complying with conditions for transferring goods in designated zones
- Failing to issue tax invoices or alternative documents when making a supply
- Not complying with conditions for electronic tax invoices and credit notes
- Not displaying tax-inclusive prices on tax invoices
How does VAT Accounting and VAT Filing Affect Businesses?
VAT accounting is a very thorough and intricate process for any business in UAE. In case of breach of VAT laws, businesses are subject to face heavy penalties and fines by the Federal Tax Authority of UAE. Therefore companies must stay in compliance with Federal Tax Authority in regard with VAT filing. It is also best to consult with a tax expert in UAE or partner with a tax consultancy firm for the ongoing tax accounting matters in the business.
Consult “VAT Registration UAE”
Late VAT payments can significantly impact your business’s profits. Engaging a VAT consultant in Dubai can help ensure compliance and timely payment, avoiding hefty penalties. For expert services, contact VAT Registration UAE.
Read Also: VAT Penalty Waiver in the UAE
