When a company violates the VAT legislation, the Federal Tax Authority (FTA) makes the discretion to apply severe fines and penalties.

Each VAT punishment in the UAE will cost no less than 500 AED, no more than quadruple the real tax amount or the amount included in the other list of administrative penalties, as approved by the UAE cabinet.

So, it is crucial for a businessman to be aware of the many situations that might result in the implementation of UAE VAT fines for breaking the country’s regulations in order to avoid such occurrences.

Businesses that violate the administrative procedure, which must be properly followed by a taxable person, are subject to fines or penalties.

1. Everyone involved in the supply of products that are taxable in the UAE and fall within the statutory VAT registration threshold must register for VAT and get a Tax Registration Number (TRN).

2. There is a late registration fee of AED 20,000 for those who do not register for VAT within 30 days of attaining the stipulated turnover level.

3. A taxable person must apply for VAT de-registration if they cease providing taxable supplies or if their taxable turnover for the previous 12 months is less than the voluntary registration limit.

The failure to do this within 20 business days of the event will result in a penalty of AED 10,000.

4. Retailers and vendors must show the pricing of the things they are selling, which

are VAT-inclusive.

The maximum price indicated at the retail outlet, which is inclusive of VAT, is the last price a consumer must pay for a commodity. Failing to do so would result in the seller being assessed a penalty of AED 15,000/-.

5. The seller or merchant who is tax registered would be responsible for providing tax invoices or tax credit notes to the customers, according to the UAE VAT legislation.

The authorities may impose a penalty of AED 5,000/- on the vendor for each tax invoice or tax credit note if this is not done.

6. Failure to submit VAT returns by the 28th of every month (following the tax period) will result in a penalty of AED 1,000 for the first offence and AED 2,000 for subsequent offences. The tax-registered person is required to pay the FTA within the deadline specified for filing returns or the VAT return deadline.

In the UAE, the penalty for filing a VAT return late is 2% of the unpaid amount beyond the due date, and an extra 4% will be charged if it is still outstanding even after 7 days.

If the tax-registered individual doesn’t pay within a month, 1% of the outstanding balance will be levied everyday until the penalty reaches 300% of the payable tax amount

7. If the taxable person fails to retain and manage all the records or transactions for every transaction, AED 10,000 will be taxed the first time.

If the offence is committed again, the fee will increase to AED 50,000 (these documents must be provided to the FTA or during a tax audit; failing to do so would result in a fine or penalty).

8. In accordance with the FTA’s requirement, businesses are required to produce documents that have been translated into Arabic.

As long as they provide them in compliance with the FTA’s requirement, they are free to preserve their records and documentation in either English or Arabic.

AED 20,000 in fines will be applied if they don’t.

If a taxable person can provide any documentation that supports their claim that they were unable to comply with the requirements of VAT legislation, the Federal Tax Authority (FTA) has the power to decrease or abolish fines that have been imposed on them.

In these circumstances, the authority may waive or lessen the penalty specified in the law’s Executive Regulations.