UAE has introduced certain provision under Vat deregistration that may require penalties for breaching the provisions of VAT law. UAE Cabinet has approved the several penalties that will be imposed on registrant for violations of the tax laws. The main purpose is to comply with the legal requirements to avoid the consequences of penalties.
The registrant who is required to pay penalty is:
- Any person who has violated any law guideline within the Federal Tax Authority.
- Any person who comes under this law is required to fulfill the obligations as stipulated by tax law. If the person fails to comply with the obligations either willfully or due to not being aware of the provisions may face a penalty.
Types of penalties
There are two types of penalties that can be imposed for failing to comply with tax regulations.
Penalties that are paid additionally by a registrant for breaching the provisions of the VAT Law. The amount of VAT penalty is mentioned in Federal Tax Authority guidelines or consulting a VAT expert can also guide with the exact amount levied on each violation.
Some violations include: –
- Failure to maintain records.
- Fails to submit the required data.
- Failure to submit VAT returns on time.
Federal tax authority (FTA) has authority to waive or reduce penalties at its discretion
Tax evasion penalties
Penalties that are paid when a registrant uses illegal means to reduce the tax dues.
Examples of violations include: –
- Deliberately providing false information to the Federal Tax Authority
- Deliberately concealing or destroys documents that were supposed to be submitted to the Federal tax authority.
Examples of action and omission that give rise to penalties
- Failing to submit a deregistration application within the required timeframe specified by the tax law.
- Failure to submit a tax return or make the due payment within the required time frame
- Failure to ensure the correctness of the final tax return. All transactions must be reported in the final tax return including any deemed supplies for any Goods and Services of Business carried out by the Taxable Person at the time of de-registration
- Offenses related to tax evasion, where a registrant performs a deliberate act or omission with the intention of violating the provisions of tax legislation
- Failure to submit the data, records, and documents related to tax when authority is requested
- When a registrant fails to settle the all the dues within the timeframe specified in the Tax Law.
- When registrant voluntarily disclosing errors on the Tax Return, Tax Assessment or Refund application
- Registrant submitting an incorrect Tax Return.
Right to object the penalties
A registrant has the right to object penalties imposed by authorities by submitting the request to reconsider any of the any of its decision. Such a decision has to be passed with the required reason from the authority.
Registrant failing to settle any penalties within the specified timeframe under this Law and the Tax Law can seek the guidance of a VAT expert for further procedures.
Keeping a track on record of all their business income, costs and other associated VAT charges, and ensuring all records are up to date. You may also consult a VAT expert for conducting VAT research on your behalf and also can comply with the new regulations in order to avoid penalties.
The federal tax authority has provided various regulations on how to abide by the tax laws. You have to be cautious when you file your returns and pay taxes. Farahat and co provide expert services of vat deregistration. Our VAT experts can guide to avoid tax penalties. If you have any inquiries concerning vat de registration contacts us