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VAT Returns Fines and VAT Penalties in the UAE For Noncompliance

On October 1, 2017, the UAE Council of Ministers, led by His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and the Ruler of Dubai, had announced the official fines and penalties for any violators of tax law.

The authority revealed that penalties are ranging from no less than 500 AED and not more than 300% of the value of the tax of the transaction with the violation case.

All companies are required to observe with strict compliance with all VAT rules and must keep track of required records as mandated by the law. Failure to do so will subject the violators to pay the unwanted penalties and fees.

Read more: Administrative penalties under VAT in UAE

How to avoid VAT Fines and Penalties in UAE?

Here are some reminders on how to Avoid Fines and Penalties

  1. Strictly Keep track of your records: As per the UAE’s VAT Tax rule, companies must observe to keep accounting records and commercial books of all their stocks and any Tax-related information as mandated by the Tax Law.

Companies are also required by the UAE Federal Tax Authority to preserve these Tax-related records and documents to a minimum of 5 years, which includes Tax Invoice issued and received for a minim of 5 years tax period.

Failure to comply this will be penalized with 10,000 AED for the first offence, and 50,000 AED for recurring offences effective on January 1, 2018. Chat with us live to find out more about required records mandated by law and on how we can help you strictly observe these requirements.

  1. Always display prices inclusive of tax: Failure to comply this will receive a penalty of 15,000 AED. In addition, we strongly advise all to carefully obey this rule especially for excise tax which applies to specific goods such as tobacco products, carbonated and energy drinks. The UAE government promotes reduced consumption of these products by making these products as the most taxable goods whereas increase tax revenue for the government.
  2. Keep taxable goods in its designated zone and beware to observe proper procedures when moving goods to another designated zone. Our tax experts can give you more information about VAT tax jurisdiction and can help you avoid undesirable penalties. Failure to comply with this will be subject to a whacking penalty of 50,000 AED, or 50% of tax of the goods (whichever is higher).
  3. Finally, you must have a current registration upon meeting the threshold requirement, as well as current certificates, and must always be aware of all UAE VAT rules (subscribe to our free newsletter and email updates). Farahat & Co. can assist you with your registration and renewal and can keep you updated with all important government announcements.

Learn more: How to appeal for VAT penalties in UAE?

The Authority has given us very transparent and straightforward instructions on how we can fully be able to abide with exactness the UAE Tax-regulations. Be cautious, prevention is always the right choice. File your Tax-returns and pay your taxes on time. Seek help from the true vat consultants in  to avoid penalties.

Schedule a consultation today with Farahat & Co., and you will be assisted by a guaranteed UAE Tax expert.

For more information, you may call us at our office hotline no: +971 4 2500251, or mobile no: Mob: +971 55 370 1232+971 42 500 251.

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.