What are the Penalties for Non-Compliance under the UAE VAT?

Violation

Penalty

Not displaying prices inclusive of VAT

AED 5,000

Not notifying the authority of applying tax based on the margin

AED 2,500

Not complying with conditions and procedures related to the transfer of goods in designated zones

The penalty will be the higher of 

• AED 50,000 or 
• 50% of the unpaid tax on the goods related to the violation

Not issuing tax invoices or alternative documents while making supplies

AED 2,500 in each instance

Not issuing tax credit notes or alternative documents

AED 2,500 in each instance

Not following the conditions and procedures related to issuing electronic tax invoices and electronic tax credit notes

AED 2,500 in each instance

Violation

Penalty

Not keeping the records as mentioned in the tax procedures law and the tax law

AED 10,000 for the first time & AED 20,000 for each repeat

Not submitting the records in Arabic when authority requests

AED 20,000

Not submitting the registration application within the specified time limit

AED 10,000

Not submitting the deregistration application within the specified time limit

AED 1,000 every month but a maximum of AED 10,000

Not informing amendment of tax records to the authority

AED 5,000 for the first time  & AED 10,000 for each repeat

Not notifying about the appointment of a legal representative the authority within the specified time limit

(Legal representative shall pay this penalty)

AED 10,000

Legal representative not filing the tax return within the specified time limit

(Legal representative shall pay this penalty)

AED 1,000 for the first time & AED 2,000 for each repeat within 24 months

Not submitting tax returns within the specified time limit

AED 1,000 for the first time & AED 2,000 for each repeat within 24 months

Non-payment of tax mentioned in the tax return, voluntary disclosure, or tax assessment form within the specified time limit

The taxpayer shall pay the below penalty:

1. 2% of the unpaid tax on the next day of the due date.
2. 4% monthly penalty till the date of payment of unpaid tax.
3. The maximum penalty is up to 300% of the unpaid tax.

The due date of payment will be as follows:

• In case of voluntary disclosure: 20 business days from the submission date.
• In case of tax assessment: 20 business days from the receipt date.

Submitting incorrect tax returns

1. AED 1,000 for the first time and AED 2,000 for each repeat.
2. When the incorrect tax return results in a tax difference of less than the penalty mentioned above, the penalty would be lower of 
   1. Tax difference, or
   2. AED 500

1. No penalty shall be imposed when taxpayers correct the return before the tax payment due date.

Voluntary disclosing the errors in a tax return, tax assessment, or refund application

Time gap between the voluntary disclosure and the due date of the tax return, tax assessment, or refund application

Penalty

Within one year

5% of tax difference due 

to the error

Within two years

10% of tax difference due 

to the error

Within three years

20% of the tax difference due 

to the error

Within four years

30% of the tax difference due 

to the error

Voluntarily disclosure of errors in a tax return, tax assessment, or refund application (before a tax audit)

1. 50% on the tax difference due to the error
2. 4% monthly penalty on the following:
   1. Unpaid tax from the due date of tax payment until the date of receipt of the tax assessment.
   2. Ineligible refund from the date of tax refund until the date of receipt of the tax assessment, in case of refunds. 

Not facilitating the work of the tax auditor

AED 20,000

Not calculating the tax on behalf of another person as specified under the tax law

The taxpayer shall pay the below penalty:

1. 2% of the unpaid tax on the next day of the due date.
2. 4% monthly penalty till the date of payment of unpaid tax.
3. The maximum penalty is up to 300% of the unpaid tax.

The due date of payment will be as follows:

• 20 business days from the submission date in the case of voluntary disclosure.
• 20 business days from the receipt date in the case of a tax assessment.

Not accounting for tax due on the import of goods as specified in the tax law

50% of unpaid or undeclared tax