Although some penalties for violations related to VAT in UAE are becoming less severe, there's still a very alarming array of VAT enforcement powers that can trap unwary registered businesses. Through proper awareness of all the problem areas, as well as careful planning, it’s possible to avoid being an unwitting victim.
Filing of Tax Returns for VAT-Registered Businesses
The following violations and penalties are applicable for VAT-registered businesses in UAE:
The Federal Tax Authority (FTA) must be notified of your liability in undergoing VAT registration when your taxable turnover exceeds the mandatory registration threshold for the past twelve months. The mandatory registration threshold in UAE is AED 375,000. If you believe you’ll be exceeding the threshold soon, you may begin the registration process.
When notification regarding VAT registration in UAE is late and you've failed to notify the tax authority, you’ll be charged regardless of the reason or excuse you have for the delay. A penalty of AED 20,000 will be imposed onto your business.
Take note: the penalty may be mitigated at the discretion of the FTA with levels of mitigation greatly dependent on the unique circumstances of every single case.
Following the registration for VAT in UAE
Every business in UAE that is registered for VAT needs to make sure that it’s organized in dealing with taxation on-time and correctly:
Appeals against penalties, assessments, and amount of interest that’s charged by the FTA may be made by a VAT-registered business or its legal representative. The first appeal will be local and independent done by the FTA. The FTA has powers of mitigation for appropriate circumstances. When an appeal is against an imposition of penalties or interest, tax must be paid prior to an appeal being heard. This is unless a business is capable of demonstrating the fact that it’s unable to pay due to financial hardship.
For further information and assistance on VAT legislation in UAE, call Farahat & Co. in VAT Registration UAE today!
Disclaimer: Content posted is for informational & knowledge sharing purposes only, and is not intended to be a substitute for professional advice related to tax, finance or accounting. The view/interpretation of the publisher is based on the available Law, guidelines and information. Each reader should take due professional care before you act after reading the contents of that article/post. No warranty whatsoever is made that any of the articles are accurate and is not intended to provide, and should not be relied on for tax or accounting advice.
You can access Law including Guidelines, Cabinet & FTA Decisions, Public Clarifications, Forms, Business Bulletins for all taxes (Vat, Excise, Customs, Corporate Tax, Transfer Pricing) for all GCC Countries in the Law Section of GCC FinTax