Administrative Penalties under Tax Procedures Law by FTA in UAE

Administrative Penalties under Tax Procedures Law by FTA in UAE


In our previous article, we have discussed the administrative penalties (popularly known as VAT penalties) applicable under the Federal Decree Law on VAT. In addition to these administrative penalties, certain violations and their respective penalties are also defined in the Federal Tax Procedures Law. These will also have a bearing on persons registered under VAT in UAE. Let us discuss these violations and their respective administrative penalties under VAT in UAE.

Violation Administrative Penalty (AED)
1.Failure by a person conducting business to keep the required records and other information as per the Tax Procedures Law and the Tax Law 10,000 for the first time
50,000 in case of repetition
2.Failure by a person conducting business to submit data, records and documents related to tax in Arabic to the FTA when requested 20,000
3.Failure by a Taxable Person to submit a registration application within the timeframe specified in the Tax Law 20,000
4.Failure by a registrant to submit a deregistration application within 20 business days after the occurrence of an event requiring deregistration 10,000
5.Failure by a Registrant to inform the FTA of any circumstance that requires  amendment of the information in the Tax Records kept by the FTA 5,000 for the first time
15,000 in case of repetition
6.Failure by a person appointed as a legal representative for a Taxable Person to inform the FTA of his/her appointment within 20 business days from the date of the appointment. The penalty will be due from the legal representative’s funds 20,000
7.Failure by a person appointed as a legal representative for a Taxable Person to file a tax return within the 28th of the month following the end of the tax period. The penalty will be due from the legal representative’s funds 1,000 for the first time
2,000 in case of repetition within 24 months
8.Failure by a registrant to submit the Tax Return within the 28th of the month following the end of the tax period 1,000 for the first time
2,000 in case of repetition within 24 months
9.Failure by a Taxable Person to settle the tax payable in a submitted tax return or tax assessment that he/she was notified of, within the 28th of the month following the end of the tax period
  • a.2% of the unpaid tax, due immediately after the due date is crossed
  • b.4% of the unpaid tax, due on the 7th day following the deadline for payment
  • c.1% daily penalty on the unpaid tax, due from one calendar month following the deadline for payment, up to a maximum penalty of 300% of the unpaid tax
10.Submission of an incorrect tax return 2 penalties will be applied:
  • a.Fixed penalty: 3,000 for the first time
    5,000 in case of repetition
  • b. Percentage based penalty: 1.50% of the unpaid amount if the registrant does not make a voluntary disclosure after being notified of a tax audit and audit process has started, or after being asked for information relating to the tax audit, whichever takes place first. 2.30% of the unpaid amount if the registrant makes a voluntary disclosure after being notified of a Tax Audit and before the FTA starts the Tax Audit. 3.5% of the unpaid amount if the registrant makes a voluntary disclosure before being notified of a tax audit by the FTA
11.Voluntary disclosure by the taxpayer of errors in tax return, tax assessment or refund application Same as above  
12.Failure by a Taxable Person to voluntarily disclose errors in tax return, tax assessment or refund application before being notified that he will be subject to a Tax audit 2 penalties will be applied:
  • a.Fixed penalty:
    3,000 for the first time
    5,000 in case of repetition
  • b.50% of the amount unpaid
13.Failure by a person conducting business to facilitate the work of a tax auditor 20,000
14.Failure by a Registrant to pay tax on behalf of another person though he/she is obligated to do so
  • a.2% of the unpaid tax, due immediately once the deadline for payment of tax is crossed
  • b.4% of the unpaid tax, due on the 7th day following the deadline for payment
  • c.1% daily penalty on the unpaid tax, due from one calendar month following the deadline for payment, up to a maximum penalty of 300% of the unpaid tax
15.A person not accounting for tax due on import of goods 50% of the unpaid or undeclared tax

It is clear that violations and non-compliance under VAT will attract strict measures in UAE. Taxpayers should ensure that the violations of Law mentioned above are avoided in order to avoid the huge penalties in case of non-compliance.

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