All About Tax Penalties

Authorities ensure that citizens comply with the laws and regulations intended to improve the system. They spotlight the companies in UAE for Tax registration. The information drives are being carried out in Dubai by Consultants so that people in the UAE can get a better understanding of rules and regulations involved in the process of tax filing. The people should seriously consider UAE Tax processes, or else they will make their businesses suffer from their own hands. With the implementation of VAT in the UAE, the authorities also imposed penalties for the violators. Any person found guilty regarding VAT and its registration will get penalized and will have to pay hefty fines as well.

Violations And Administrative Penalties Related To Tax Procedures

1. The negligence of the person to maintain the correct records and other details stated in the Tax Procedures Law and the Tax Law results in a penalty of 10,000 AED for the first time to pay, while 50,000 AED in the circumstance of repetition.

2. Failure by the individual to send the tax-related data, records, and documentation to the Authority in the Arabic language results in a penalty of AED 20,000.

3. The Taxable Person is liable to pay 20,000 AED if he/she fails to apply for registration within the period set out in the Tax Law.

4. The Registrant’s failure to request deregistration within the timeline set out in the tax law is liable to pay AED 10,000.

5. The Registrant’s failure to inform the Authority of any situation requiring a change in the details relating to its tax record held by the Authority is liable to pay 5,000 AED for the first time, while 15,000 AED in the circumstance of a repetition.

6. If the person appointed as a Taxable Person’s Legal Representative failed to notify the Authority of his appointment within the period stated. In such circumstances, he/she will be responsible for paying a penalty of AED 20,000.

7.    The failure of the individual appointed as a Legal Representative for the Taxable Person to file a Tax Return within the specified timeframe. The penalties will be due to the Legal Representative’s funds. A person is liable to pay 1,000 AED for the first time, whereas AED 2,000 within 24 months, in the case of repetition.

8.    The failure of the Taxable individual to resolve the Payable Tax stated in the submitted Tax Return or Tax Assessment within the allotted time in the Tax Law. The Taxable individual shall be obligated to pay a late payment penalty consisting of 2 percent of the unpaid tax would be due once the payment of Payable Tax is late, adding to that 4 percent will be due on the seventh day following the deadline for payment.

9. Submission of an incorrect Tax Return by the Registrant results in a penalty of 3,000 AED for the first time and 5,000 AED in case of repetition.

10. The individual’s failure to enable the tax auditor’s work in violation of the provisions of Article (21) of the Law on Tax Procedures. A taxable person is liable to pay 20,000 AED.

11. An individual who does not pay for any tax that may be due to the import of goods, as provided by the tax law. In such a case, a taxable person has to pay 50 percent of unpaid or undeclared tax.

Violations And Administrative Fines Related To Excise Tax

1.    Failure by the Taxable individual to display prices inclusive of Tax results in a penalty of 15,000 AED.

2. Failure to comply with the terms and procedures for moving the Excise Goods from a Designated Zone to some other Designated Zone and the processing and storage system of these excise goods would result in a penalty of either 50,000 AED or 50 percent of the tax.

3.    Failure by the Taxable individual to provide the Authority with price lists for the Excise Goods produced, imported or sold thereby. In such a situation, a taxable person has to pay 5000 AED for the first time, whereas 20,000 AED if the same case is repeated.

Violations And Administrative Fines Related To Value Added Tax

1. Failure by the Taxable individual to display prices inclusive of Tax results in a penalty amount of 20,000 AED.

2. Failure by the Taxable individual to notify the Authority of applying tax based on the

Margin rules in penalty fees of 2,500 AED.

3. Failure to comply with terms and procedures relevant to holding or transferring the Goods to another Designated Zone. In such circumstances, a taxable person has to pay to be higher of either 50,000 AED or 50 per cent of the tax.

4. Failure by the Taxable individual to issue the Tax invoice or an alternative document when making any supply. In such cases, a taxable person is liable to pay 5,000 AED for each tax invoice.

5. Failure by the Taxable individual to issue a Tax Credit Note or an alternative document. In such cases, a taxable person is liable to pay 5,000 AED for each tax invoice.

Five Tips To Safeguard Your Business From Penalties

If you’re a UAE business owner, here are five tips worth considering to defend your company from penalties.

1. Understand The Law

With strict policies and high monitoring of company enforcement by FTA, it is essential to be aware of the new law to prevent violations.

2. Keep Your Account Records Regularly Updated And Structured.

Holding clear records of all the accounts is one of the critical fields of tax filing.

3. Build Alerts And Reminders For All of Your Tax Obligations

Now that you have successfully registered for tax filing, it is equally necessary to be aware of your obligations. Stay prepared and bring all your tax-related events, such as filing for your tax returns, into your schedule. Experts at Jaxa are advising their clients to adhere to the law and always be mindful of any relevant updates.

4. Give Your Team Proper Training

To get the best understanding of the UAE tax system, invest your time in workshops and training that will raise the confidence of your team in handling complicated tax tasks.

5. Working With Experts To Streamline Your Processes And Have Reliable Financial Management

It is also advised to seek professional advice to help you develop proper financial management while ensuring that all of your accounts are transparent and accurate. If you don’t have an established process, Jaxa provides personalized services that your company needs.

Why Jaxa?

If the individual is not pleased with the Authority’s decision, he shall have the right to appeal to the “Tax Disputes Resolution Committee” for consideration. If the person is not happy with the decision of the Committee, he shall apply with the appropriate court in the manner specified by Article 33 of the Tax Procedures Law. In this entire process of tax filing or dispute resolution, it would be handy if you have a helping hand of third-party consultants. Experts at Jaxa have strong financial knowledge and have a strong understanding of the industry. Please be free to contact us today. COVID-19 lock downtime is best to recheck all your financial statements and clear off all the payments before given deadlines