Value Added Tax (VAT) Penalty policies have been administered by the UAE cabinet that shall be imposable on businesses for any violation found by the business organization in following the tax laws. Any person/business is obliged to follow the laws related to VAT stipulated by the law. The failures of any obligations lead to monetary or non-monetary fines or penalties incurred on the person/business. The monetary penalties shall fall in varied ranges depending on the violations. It is to be noted that no penalty shall amount to more than triple the value of the questionable transaction and will be no less than AED 500. The laws state the documentation necessary for the supply of goods, procedures related to goods transfer, generation of tax invoice, etc. Here we enlist the conditions of violations related to VAT where the penalties shall be imposed. The penalties are also mentioned along with the violations.
Penalties related to VAT along with fine:
1. If a person/business fails to include and display the taxes along with the price, which is to display prices inclusive of tax; in such cases penalties fined is AED 15,000.
2. Business/person failing to notify Authority of tax application based on the margin: in such cases, the penalty will be AED 2,500 each time of the failure.
3. Any failures to abide by the procedures related to goods’ transfer in specific zones. In this condition, the penalty will be greater than AED 50,000 or 50% of the tax, if any, which has not been paid on goods and led to the violation.
4. While making any supply, a tax invoice or an alternate document must be issued. Failing which may lead to a penalty of AED 5,000 for each missing invoice.
5. A tax credit note, or an alternative document must be issued. Any discrepancies in this are a violation of VAT and shall be fined AED 5,000 for each missing note.
6. There are certain procedures a business/person must comply with regarding the electronic tax invoice issuance or the issuance of electronic tax credit notes. Failing any such procedure or any misconduct found is a violation. This is fined AED 5,000 for any incorrectly produced document.
Some other penalties and violations can include:
1. If the taxable person fails to disclose errors voluntarily on the Tax Assessment, Tax Return or Refund Application before being notified; he/she will be subject to a Tax Audit.
2. A person performing a tax evasion offense; wherein a person indulges in a deliberate omission or act with an intention of violating the provisions of the legislation issued taxes.
3. Any person failing to produce authentic data, records, files, tax receipts, on being asked for them is considered violating the laws.
4. Any registrant failing to apply for deregistration within the specific timeframe by the Tax law.
The above stated are penalty policies related to VAT applicable in the United Arab Emirates (UAE). These policies have been identified and authorized by the Decree-law. The first and second mentioned policies relate to Article 38 and Article 43 of the Decree-law. Cabinet shall issue penalties as per the stipulated policies for any offense or violation of the law being advocated.
OBJECTING THE PENALTIES:
However, a person holds all rights to object the penalties imposed on him/her within 20 business days from the date of generation of the penalty. Such an application must be presented with valid reasons within the specific time limit for reconsideration from the person and the authority is obligated to inform the result within 5 business days to the applicant after the application is received.
SF Tax Consultancy are reliable providers of Accounts and Tax related services for nearly 15 years. Having offices in major locales of UK, we’ve successfully served a diverse range of business ventures; Start-Ups, Sole Traders, Limited Companies and Landlords.
This article is written by Sarah Ferguson who is associated with "Sarah Ferguson Tax Consultancy". Sarah Ferguson Tax Consultancy is the leading company in UAE, providing VAT Consultancy and Advisory services. We have a team of specialists with solid experience in Global & Domestic Tax, which helps us in rendering high quality Tax & VAT Business Advisory & Compliance Services.
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