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VAT Penalties in UAE

VAT Penalties Explained

Value Added Tax (VAT) Penalties

Authorities are ensuring the people to comply with the rules and regulations of VAT in UAE so that they may strengthen the system as much as possible. They are emphasizing the businesses for VAT registration in UAE. The VAT information drives are being carried out by VAT Consultants in Dubai so that people can get a better understanding of VAT in UAE.

UAE VAT implementation should be seriously considered by the people or else they will make their businesses suffer from their own hands.

VAT Consultancy Dubai

Legal firms have started providing VAT services to the people for ensuring more compliance towards this new regulation. As people do not have much idea regarding VAT and VAT return in UAE, it is a huge opportunity for them to take the services of VAT Consultants in Dubai to be at a safer point as compared to others.

Offences and Penalties

With the Implementation of VAT in UAE, the authorities also imposed penalties for the violators. Any person found guilty regarding VAT and its registration will get penalized and will have to pay heavy fines as well.

VAT Returns Fines and VAT Penalties in the UAE For Noncompliance

VAT and its education is necessary

Having the necessary information and knowledge of VAT is important because it lets the people comply with all the rules and regulations in a proper legal manner. The enforcement provisions actually take the form of offences, if anyone does an act which comes under offence for VAT. This is where the VAT consultants play their part. They inform and advice the people about how they can comply with VAT implementation.

VAT explained easier

The VAT is value added tax which is a little new in UAE. It has been just about a year since it got implemented. This is the major reason why so many actions are being taken in order to ensure its importance and compulsion. If people do not get registered for VAT, they will get punished or fined under the VAT act in UAE. The VAT advisory services are making it possible for the people to register and pay VAT without any offence. Here are some of the VAT penalties business owners may have to face if they do not register for VAT.

VAT Registration Conditions and Requirements in UAE

Failure to register for VAT

An offence will be committed by a person who, under Section 51(1)(a), does not get registered for VAT right according to section 12 of VAT. No matter whether the person is aware of the VAT liability or not, they will be punished if they don’t get registered for VAT within the timeframe. The VAT experts in UAE, for this reason, are serving the people in a huge manner so that people may comply with VAT rules and avoid getting punished at all. The penalty for not registering for VAT within the timeframe is AED 20,000.

The fines and penalties will be no less than AED 500 and not more than 300% of the value of the tax on the transaction in question. So, if you do not want your business to suffer, you better get VAT accounting ready by your VAT accountant.

What You Should Remember About VAT Registration

Failure to keep the records

Keeping the required records and data is very important if you do not want to get penalized. The penalty for not keeping the required data for VAT tax Dubai is AED 10,000 for the first time and if the violation is repeated, AED 50,000 will be charged as fine for each repeated violation. Also, if the records are not submitted in the Arabic language, if the authority asks for it, AED 20,000 will be charged as penalty.

Failure to Deregister

If a company doesn’t submit the application of deregistration within the timeframe specified in the Tax Laws, it will be charged AED 10,000.

Finding VAT Consultants for VAT Deregistration in UAE

Failure to inform about Amendments

If any amendment is made in the VAT records, the authorities should be informed about it or else, AED5,000 will be charged for the first-time violation and AED 15,000 will be charged If the act is repeated.

Failure to file the tax return

The UAE VAT consultants or legal representatives should file for the VAT return on time or else the penalty charged to the legal representative will be AED1,000 for the first time but on repetition within 24 months, AED2,000 will be charged. The appointed Legal Representation or VAT consultant is also responsible to inform the authorities within a specific timeframe of their appointment as legal representative by the taxable entity. For not informing the Tax Authorities for such appointments within the specific time, the representative can be charged AED 20,000 as a penalty that will be due from the representative’s own funds.

VAT Returns Fines and VAT Penalties in the UAE For Noncompliance

 Incorrect tax returns submission

In case of incorrect tax return submission, a penalty of AED 3,000 will be applied for the first time whereas AED 5,000 will be applied in case of repetition of incorrect submission. These are fixed penalties. There may be penalties applied based on the percentage of the tax amount unpaid to the tax authorities due to the error in submissions. The penalty imposed in percentage can be either 5%, 30% or 50% of the unpaid tax amount, depending upon how early the submitter notifies the error with respect to the tax audit by the Authority.

How to file VAT return in UAE?

Disclosure of Business Errors

AED 3,000 is applied for the first time and AED 5,000 for repeating the same as a fixed penalty. But voluntary disclosure by the Taxpayer of the business errors in Tax Returns, Assessment or Refund application will impose the penalty in the percentage of the unpaid tax amount due to business errors. Again, the percentage penalty is it 5%, 30% or 50% depends upon when the taxpayer informed the authorities of the errors with respect to the initiation of a Tax audit by the Tax Authority.

Get VAT advisory services in UAE

To be safe to escape the penalties associated with VAT in UAE, the taxpayers or those eligible to pay the tax can acquire the services of VAT Consultancies in UAE. These experienced VAT consultants can take care of your VAT problems with right in time services. Even if a taxpayer with wrong submissions gets subjected to a penalty, the VAT consultants with their right experience and knowledge can make sure that the taxpayer gets the least penalty. Get VAT services in UAE but for hiring your tax agent, you can hire someone with GCC VAT compliance diploma as well.

Vat experts in UAE

For every information, partially or wholly related to VAT, you can always count on Farahat & Co. that offers high-quality services being ISO certified. Everything you get here is up to the mark. All of the government authorities regulate Farahat & Co. So, consider it your first go for all your VAT advisory, accounting, and so many more services. Don’t let your business suffer and let your business be regulated according to VAT rules and regulations.

Ervee is a CPA with international experience in Tax and Accounting. He has over 12 years of experience in accounting and bookkeeping and over a year in VAT implementation, registration, and accounting in UAE. He regularly drives out inefficiencies in company operations and loves the challenge of helping clients find additional ways for an easier and improved compliance and verification of transactions. Read more