VAT Late Payment Penalty in the UAE: What Businesses Should Know

Ajith Kumar · June 4, 2025 · 1 min read

VAT Late Payment Penalty in the UAE: What Businesses Should Know
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The implementation of VAT (Value Added Tax) in the UAE has brought numerous responsibilities for businesses. Adhering to the VAT rules is not optional; failure to comply can lead to significant financial penalties, legal challenges, and reputational damage. In this blog, we will discuss the consequences of not following VAT regulations and how businesses can avoid these pitfalls.

What Does VAT Compliance Mean in the UAE?

VAT compliance involves meeting all obligations under the UAE’s Tax Procedures Law and Corporate Tax Law. These include:

  • Registering for VAT.
  • Filing accurate VAT returns on time.
  • Maintaining proper records of transactions.
  • Ensuring timely payment of VAT liabilities.

The Federal Tax Authority (FTA) oversees VAT compliance and has the authority to impose penalties for violations.

Table of VAT Violations and Penalties
No.Violation Penalty Amount (AED)
1Failure to maintain proper records 10,000 for first violation, 20,000 for repeated violations within 24 months
2Failure to provide records in Arabic 5,000
3Late deregistration application 1,000 per month, up to a maximum of 10,000
4Failure to update tax records 1,000 for first violation, 5,000 for repeated violations within 24 months
5Failure to notify legal representative appointment 1,000
6Late tax return by legal representative500 per month for first 12 months, 1,000 thereafter
7Late submission of tax return 500 per month for first 12 months, 1,000 thereafter
8Failure to settle payable tax14% per annum, calculated monthly
9Incorrect tax returns 500 unless corrected before the deadline
10Errors in voluntary disclosure1% monthly penalty on the tax difference
11 Failure to disclose before audit 15% fixed penalty plus 1% monthly on the tax difference
12Failure to facilitate tax audits20,000
13Late submission of declarations500 per month for first 12 months, 1,000 thereafter

Conclusion

Non-compliance with VAT rules in the UAE has far-reaching consequences, including fines, audits, and legal challenges. Businesses must prioritize compliance to avoid these pitfalls and maintain smooth operations. By adhering to VAT regulations, maintaining accurate records, and seeking professional advice, businesses can minimize risks and focus on growth.

Compliance is not just a regulatory requirement but also a smart business practice that safeguards your organization’s future.

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About the Author

Ajith Kumar

Ajith Kumar

Im a skilled content writer and SEO expert crafting engaging articles that rank. Passionate about making complex topics clear, discoverable, and valuable to readers.Dedicated to driving organic growth through high-quality, search-optimized content

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