VAT FINES AND PENALTIES
Since the introduction of VAT in January 2018, compliance with UAE VAT laws has become mandatory for all eligible businesses. The Federal Tax Authority (FTA) enforces strict rules, and failure to comply may result in significant fines and penalties. ZBS helps businesses stay fully compliant, reduce risks, and avoid unnecessary financial exposure.
Our Core VAT Fines and Penalties Services
Understanding VAT in the UAE
VAT is a consumption tax charged at a standard rate of 5% on most goods and services. Businesses act as tax collectors on behalf of the UAE government and must follow FTA regulations for registration, filing, payment, and record-keeping.
Common VAT Fines & Penalties in UAE
- Late VAT Registration: AED 10,000
- Late VAT Deregistration: AED 1,000 monthly (up to AED 10,000)
- Late VAT Payment:
- 2% immediately after due date
- 4% monthly on outstanding balance
- 1% daily (up to 300% of unpaid tax)
- Late VAT Return Filing:
- AED 1,000 (first violation)
- AED 2,000 (repeat within 24 months)
- Incorrect VAT Returns:
- AED 1,000 (first)
- AED 2,000 (repeat)
- Failure to Maintain VAT Records:
- AED 10,000 (first)
- AED 20,000 (repeat)
- Failure to Issue Tax Invoice / Credit Note: AED 5,000 per document
- Failure to Cooperate with Tax Audit: AED 20,000
VAT Fine Reduction Scheme by FTA
The UAE Cabinet approved a VAT penalty reduction of up to 70%, subject to conditions:
- Penalties imposed before 18 June 2021 and unpaid by that date
- Taxpayer settled all outstanding VAT and 30% of penalties by 31 December 2021
How ZBS Helps You Avoid VAT Penalties
- VAT compliance reviews
- Accurate VAT accounting and record-keeping
- Timely VAT return filing and payments
- Assistance with VAT fines, disclosures, and penalty reduction