Understanding VAT Amendments and Penalties in the UAE

Understanding VAT Amendments and Penalties in the UAE

When your business is registered for VAT in the UAE, keeping your information up to date with the Federal Tax Authority (FTA) is crucial. Ensuring that your VAT registration details are accurate can help avoid penalties and ensure the smooth operation of your business. Below, we cover the key VAT amendments businesses can make and the penalties associated with non-compliance.

What Amendments Can Be Made?

Businesses may need to make various amendments to their VAT registration over time. Here’s an overview of possible changes.

While making amendments, businesses to make a note that changes are made either by using the “Edit” button functionality or the “Amendment” button functionality.

The changes made through the “Edit” option, are reflected automatically on your profile, for which FTA approval is not required. The below are the sub sections which can be amended in the “About the VAT Registration” of the VAT registration application, which do not require approval from the FTA –

1. Business Activities of the Applicant Section

2. GCC Activities Section

3. Customs Registration Information Section

By clicking the “Amendment” button, the below sections can be amended, that require approval from the FTA. Those sections are –

1. Details of the Applicant

2. Contact Details

3. Banking Details of the Applicant

4. Business Relationships

5. About the VAT Application

6. Declarations

On 28th April 2021, Resolution No.49/2021 was issued to amend the provisions of Cabinet Resolution No 40/2017 relating to Administrative Penalties imposed for violation of Tax Laws in the UAE. Few of them are listed below -

1. Failure to notify the FTA of any amendments to the details provided in the VAT registration

AED 5,000 for the first offense,

AED 10,000 in case of repetition

2. Failure of the person conducting Business to keep the required records and other information specified in the Law.

AED 10,000 for the first time,

AED 20,000 in case of repetition

3. Failure of the Taxable Person to display prices inclusive of Taxes

   AED 5,000

4. Failure of the Taxable Person to notify the Authority of applying Tax based on Margin

AED 2,500

5. Failure to comply with the required conditions and procedures related to keeping the Goods in a Designated Zone or moving them to another Designated Zone

The penalty shall be the higher of AED 50,000 or 50% of the Tax, if applicable, chargeable on the goods in relation to the violation

6. Failure of the Taxable person to issue a Tax invoice or the alternative document when making any supply

AED 2,500 for each detected case

7. Failure of the Taxable person to issue a Tax Credit Note or the alternative document

AED 2,500 for each detected case

8. Failure of the Taxable person to comply with the conditions and procedures regarding the issuance of a Tax invoice and a Tax credit note electronically

AED 2,500 for each detected case

Keeping your business information updated with the FTA and complying with the VAT regulations is crucial to avoid penalties. Failure to comply can result in penalties outlined in Cabinet Decision No. 49 of 2021. At ALWAHAT ACCOUNTING & INTERNAL AUDIT SERVICES, we’re here to help you with VAT compliance. Our team of expertise can assist you in making necessary updates and avoiding penalties. For personalized guidance and support to stay compliant with UAE VAT regulations, contact ALWAHAT today!