UAE Amends non-compliance and late payment VAT fines in 2021

The Federal Tax Authority (FTA) on Saturday announced a reduction in vat fines and penalties for businesses to facilitate accurate tax returns filing by June 28, 2021. The UAE Cabinet issued Resolution 49/2021 to amend the provisions of Cabinet Resolution 40/2017 relating to administrative penalties imposed for violating tax laws in the UAE. The resolution will be effective from 28 June 2021. 

16 types of administrative penalties have either been reduced or calculation method modified under this latest initiative about amending some provisions of the Administrative Penalties for Violation of Tax Laws in the UAE, as noted in a statement issued by FTA. The initiative is specially designed to help and support tax registrants in fulfilling their tax obligations.

In a statement director-general of the Federal Tax Authority, Khalid Ali Al Bustani said
“This comes as part of the wise leadership’s directives to implement the tax system according to the best standards that ensure further growth for the national economy and help achieve transparency and economic momentum, providing an ideal and resilient tax legislative environment that encourages self-compliance and keeps pace with change through constant issuance of decisions in accordance with phased requirements,”

The FTA director-general called on tax registrants to take advantage of the important benefits provided by the new amendment as it provides more relief to business sectors in order to support their effective contribution to boosting the national economy’s growth.

The Key Highlights of this VAT Fines decision include :

  • Late payment penalities are reduced from 1% per day to 4% per month
  • New starting date for calculating late payment penalties
  • Reduction in existing penalties
  • 300% cap still applies
  • New Administrative mechanism

The new amendment includes

Description        Penalty (New)Penalty (Old)
Failure of the taxable person to submit a registration application within the time limitAED 10000AED 20000
Failure of the registrant to submit a deregistration application within the timeframeAED 1,000 monthly (not exceeding AED 10,000)AED 10000
Failure by the taxable person to display prices inclusive of VAT  AED 5000AED 10000
Failure by the taxable person to issue a tax invoice/tax credit note.AED 2,500 (for each instance discovered)AED 5,000 (for each tax invoice)
Failure by the taxable person to comply with the conditions and procedures regarding the issuance of electronic tax invoices and electronic tax credit notes.2,500 (for each instance discovered)AED 5,000 (for each tax invoice)
Failure of timely FTA update5000/100005000/15000
Failure to inform the legal representative1000020000

In addition, penalties based on the percentage applicable for late payment of tax – on a tax return or voluntary disclosure or assessment of tax – will be deducted and the 1% daily penalty previously levied will be waived.

Are you looking for VAT & Tax related services in the UAE ? Contact us today.