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The main VAT penalties are AED 10,000 for late registration, AED 1,000 for a first late return (AED 2,000 if repeated within 24 months), and 14% a year on unpaid tax. The table below lists the amounts we have read in the consolidated Cabinet Decision text.
The April change
Cabinet Decision No. 129 amended the penalty tables for the Tax Procedures Law, VAT and excise. It took effect on , and the Federal Tax Authority announced it the next day. Many penalties were reduced or are now calculated differently.
We read only the consolidated table that applies after the change. The old amounts and the size of each reduction are not compared here. If you have a penalty from before the change, check the Federal Tax Authority notice and your EmaraTax account for which rule applies to your case.
Source: Federal Tax Authority, news on the decision amending administrative penalties, checked .
Penalties that apply to VAT registrants
| Violation | Penalty (AED) |
|---|---|
| Not keeping records | AED 10,000, higher if repeated within 24 months |
| Late registration application | AED 10,000 |
| Late deregistration application | AED 1,000, then the same on the same date each month, up to AED 10,000 |
| Not updating tax record information | AED 1,000, or AED 5,000 if repeated within 24 months |
| Registrant late return | AED 1,000 first time, AED 2,000 if repeated within 24 months |
| Late payment of payable tax | 14% per annum, charged monthly (each month or part) on the unpaid amount |
| Incorrect return | Charged, but not if corrected before the filing deadline or fixed by a voluntary disclosure with no change in tax due |
| Voluntary disclosure | 1% per month on the tax difference |
| No voluntary disclosure before audit notice | Fixed 15% of the tax difference plus 1% per month |
| Not showing prices inclusive of tax | AED 5,000 |
| Not notifying the FTA of the margin scheme | AED 2,500 |
| Not issuing a tax invoice | AED 2,500 per case |
| Not issuing a tax credit note | AED 2,500 per case |
| Not meeting e-invoice conditions | AED 2,500 per case |
| Breaking designated zone goods conditions | Higher of AED 50,000 or 50% of the tax on the goods |
| Failure to account for reverse charge tax | 14% per annum, charged monthly on the unpaid amount |
| Failure to calculate tax due on imports | 50% of the unpaid or undeclared tax |
Source: Federal Tax Authority, administrative penalties under Cabinet Decision No. 40 as amended, checked .
For the separate e-invoicing fines, see e-invoicing in the UAE. Corporate tax has its own table: see corporate tax penalties.
What to do about a late return
- File now. The penalty grows with delay, and so does the interest on unpaid tax. A return filed late is still better than none.
- Pay the tax at the same time. The 14% charge applies to the unpaid amount for each month or part of a month.
- Check the deadline you missed. The return and payment are due by the 28th day after the tax period ends. See VAT return filing.
- Look at your EmaraTax account. Confirm the penalty shown, the date and the rule applied.
- Correct errors properly. If a past return was wrong, use a voluntary disclosure and do it before the FTA sends an audit notice. After a notice, the fixed 15% applies.
- Ask a professional if the amount is large. A firm can check the calculation and the dates. See VAT consultants.
Keep the records that prove your case
Penalties are usually decided on dates and documents. Keep your filing receipts, invoices and bank payments for five years. Not keeping records is itself fined.
Source: Federal Tax Authority, Tax Procedures Executive Regulation, Article 3, checked .
Use the calculator carefully
The FTA penalty calculator on this site gives an estimate from the table above. It is not an official figure. This page is general information, not tax advice, and DubaiAccountingFirms.com is not the Federal Tax Authority. For the wider VAT rules see VAT in the UAE.
