As far as tax payment is concerned, be it individuals or organizations, they either oversee it, or pay at the last minute. Ever since VAT has been implemented in the UAE, it is mandatory for business organizations to pay tax on time, which ultimately aids the government in strengthening the economy and elevating it to greater heights. It is also important to note that tax defaulters are invariably penalized, be it in any country, and likewise, the Government of Emirates has also laid down certain penalties for individuals and organizations for the non-payment of tax on time.

Reasons for VAT penalties:

If as a business entity you are found guilty of the following charges, you will fall under the bracket of VAT penalty-

  1. Failure to register for VAT: Under Section 12 of VAT, a person has to register for VAT on the designated timeframe. Irrespective of whether the person was aware of the VAT liability or not, if it is not registered on time, an offence will be noted under Section 51 (1) (a). Besides, the accused will also be charged a penalty of AED 20,000 and it should also be noted that the fine and penalties would not be less than AED 500 and may go up to 300%. Naturally, the VAT consultancy firms leave no stones unturned to clear the VAT accounting process, in turn, helping individuals and companies to keep penalties at bay.
  2. Failure to maintain VAT records: it is crucial to maintain proper accounting records in the eyes of the government to execute legal business operations. If an individual or company is found guilty of not maintaining proper records required for VAT in Dubai, a fine of AED 10,000 is to be paid. If the error gets repeated, he will have to pay AED 50,000. Besides, the documents are expected to be drafted in Arabic, and if one fails to maintain, you would incur a penalty of AED 20,000.
  3. Failure to deregister VAT: If a company is found guilty of failing to de-register the VAT within a certain time-frame, it will be penalized a fine of AED 10,000.
  4. Failure to inform about amendments: if any changes are made in the amendments of the company, the Government of Emirates should be informed of the same, and failure to do the same the company will be penalized with an amount of AED 5000. If the offence is repeated, you will have to shell out a fine of AED 15,000.
  5. Failure to file the tax return: a company is expected to file tax return at the end of an accounting period. If a UAE-based company is found guilty of not filing the necessary returns on time, a penalty of AED 20,000 will be imposed. It is recommended to seek tax consultation services to avoid such penalties.
  6. Incorrect tax return submission: the companies should furnish accurate information when it comes to tax return. In case incorrect tax return submission is identified, a penalty of AED 3,000 will be applied. If such incidence is repeated, the penalty will go up to AED 5,000. It is also noteworthy that the fine imposed will be 5%, 30%, or 50% of the unpaid tax amount, and it is also determined by when the errors were identified and informed.
  7. Disclosure of business errors: this invites the same penalty as above, with AED 3000 being applied the first time, and AED 5000 in case if a repetition. The penalty percentage stands at 5%, 30%, or 50% depending upon when the government authorities were informed.

Hence, it goes without saying that a company’s VAT implementation in the UAE is to be handled meticulously. Your business can land introuble if there’s any sort of inaccuracy. In this regard, it is advisable to avail advisory services that can go a long way in avoiding these loopholes.

The core objective of GCC Fillings is to ensure the smooth and transparent end-to-end services for businesses. It is aimed at being a reliable, one-stop solution for businesses across sectors.

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