VAT Late Payment Penalties in the UAE

VAT is an essential factor for business operation in the UAE. Businesses which meet the threshold turnover must register for VAT and comply with the rules laid by the Federal Tax Authority. Late payment and late filing of VAT returns causes businesses to incur fines and penalties. Therefore, this article shares a guide on how to avoid fines and penalties for late payment of due VAT. VAT registration UAE, a reputable Tax Consultant, assists Taxable Persons to timely register and file VAT in compliance with statutory VAT regulations in UAE.

Read Also: VAT Late Payment Penalty In UAE

VAT violations which result in penalties in the UAE

VAT violations which result in penalties include the following:

  1. Failing to pay VAT in the allotted time frame.
  2. Failing to submit VAT returns by the deadline.
  3. Not registering your company for VAT within the allotted time.
  4. Not showing the cost of your goods or services that include taxes.
  5. Failing to maintain official financial records, such as books of accounts, tax invoices, and other records required by tax legislation.
  6. Refusing to provide the needed Arabic documents.
  7. Failing to notify the FTA of any modifications to the tax records you must submit.
  8. Failing to notify the FTA when applying a margin-based tax.
  9. Failing to present tax invoices, tax credit notes, or other comparable documentation during pertinent transactions.
  10. Not using the proper tax invoice format.

Important tips to avoid VAT late payment penalties in the UAE

Read More: 11 Tips to Avoid VAT Late Payment Penalties in the UAE

Businesses can avoid VAT late payment by ensuring the following:

  1. Issuing and ensuring that tax invoices are being prepared as per the FTA guidelines- VAT laws state that it is required for companies producing taxable supplies to issue original tax invoices and give them to every customer who receives their goods or services. Keep the tax invoice in your files in case the intended recipient is unable to receive it. But it’s also crucial that the pertinent information is on your formal tax invoice. The following has to be mentioned:
  • As the heading of the invoice use” Tax Invoice”.
  • Name, location, and Tax Registration Number (TRN) of your company.
  • The transaction’s unique tax identification number (TIN), either serial or pertinent.
  • Dates of supply and issuance, if different.
  • Specifications of the goods or services sold, including their dimensions, number, unit prices, amounts due, and VAT rates in AED.
  • offered reductions.
  • The total amount due and the tax due, both in AED.

Check Out: UAE VAT Invoice Requirements

  1. Paying your due VAT on time- Late VAT payments are subject to an automatic 2% late fee. You incur an additional 4% monthly penalty for paying taxes late or with delays. These fines might add up and cost you money that you could be using to support your company’s requirements. Always pay your VAT before the deadline to avoid incurring these severe penalties. Don’t postpone paying your taxes until the very last minute either. The government body may not receive your payment on time if there are delays in bank transactions.

 

  1. Maintaining proper VAT records and accounts- Businesses that are registered for VAT are required to keep tax records and documents on file for a minimum of five years, according the Executive Regulation on Tax Procedures. These tax records and papers consist of:
  • Records of every commodity and service your organisation exports.
  • a list of every import and supply of goods and services.
  • Records of non-related products and services that your corporation purchased, used, or discarded.
  • Records of the items and services from which input taxes were not subtracted.
  • records of account modifications and tax invoice corrections.
  • Tax invoices, credit notes, and other comparable papers that your business has received in paper and digital form.

To keep and update these records and documents, you might put in place your own system. Additionally, depending on the type of your business and the tax regulations that apply to your organisation and operations, the time of record-keeping may be shorter or longer. Consulting with general and VAT experts in the UAE can help you develop and put into place an effective VAT record-keeping system.

 

  1. Submitting tax returns before the deadline- The UAE provides three-month or quarterly tax periods for VAT-registered enterprises to submit tax returns. Your business must submit its VAT returns no later than 28 days after the tax period’s conclusion. You may, however, submit them on the following business day if this deadline occurs on a weekend or holiday. However, depending on what the government requires, you can be asked to submit your VAT returns sooner or later. To avoid incurring any fines, be careful to heed the FTA’s guidelines.

 

  1. Setting up a VAT calendar for reminders of VAT filing and payments in time- Lastly, you must set up a VAT calendar and reminder in your business system that ensures that your VAT payments and filing dates get reminded to you. This is a way of avoiding the fines altogether.

Avail the expert services of VAT Registration UAE

To avert penalties and fines for noncompliance with VAT regulations, businesses are advised to avail the expert services of trusted Tax Consultants in UAE. VAT registration UAE, a reputable Tax Consultant, assists Taxable Persons to timely register and file VAT in compliance with statutory VAT regulations in UAE. Thus, contact us today and we shall be glad to assist you.