The COVID situation has affected all the businesses and organizations in every aspect and way it could. In such situations, the federal tax authority in UAE has decided to make certain amendments and changes to the amount charged as fines and penalties from various businesses. The authorities charged these VAT fines when a business fails to comply with the standards and makes certain tax mistakes.
The authorities have made these fine reductions and changes to provide less stress and burden to businesses already suffering from the pandemic. These fine amendments will make the businesses and organizations improve or correct their mistakes as well. But the authorities have not amended certain penalties; the penalty amount before and after covid remained the same. Some such penalties are as follows.
- Failure to submit documents and records
- Not accounting for tax due on imports
Explore this article to know which VAT fines and penalties FTA has amended due to COVID.
Top 5 VAT Fines and Penalties Amendments after COVID
To ensure businesses comply with the standards, the Federal Tax Authority in UAE has imposed certain fines and penalties if the businesses fail to meet the standards. These penalties make sure every business makes the right tax payments and submits the correct records without any possible errors. But there has been a great change in the amounts that FTA defined on several penalties post-Covid. Here we listed some of the VAT penalties that FTA has amended due to the pandemic.
Amendments in late registration fines
If the taxable turnover of a business is equal to or more than the authorities’ defined amount, they must register for VAT on time. The penalty for late registration earlier was AED 20,000, which has now been amended to 10,000 AED. This amount is still huge, and businesses should avoid these penalties by timely registrations. For most businesses, the best VAT consultancy in Dubai is ideal for timely calculating their taxable turnover and filing for registration if they are eligible for registration to avoid penalties.
Amendments in late De-registration fines
If you no more fall under the eligibility criteria of VAT payment, then it is obligatory to file for deregistration on time. For avoiding deregistration penalties, it is imperative to request deregistration within 20 business days. The previous penalty amount that FTA implied for late deregistration was equal to 10,000 AED. But the amount after the amendment is 1,000 AED; for avoiding these penalties, businesses must be aware of the deregistration rules and policies.
Late payment penalty amendment
Failure to submit the applied amount according to your taxable income will result in VAT penalties and fines. If you have registered for VAT, then it is important to submit your tax amount to the authorities in the given timeframe to avoid late submission penalties. The late submission fine before the pandemic was 2% of the unpaid tax if failed to submit immediately, 4% if failed to submit in 7 days. And 1% for each day if the payer fails to pay the specified amount in one month period. The new fines are 2% of the unpaid tax if failed to submit immediately and 4% of the tax amount if failed to submit within a month.
Incorrect tax return penalty amendments
The taxpayer must submit a document containing the details of the tax amount they have submitted against the income they have earned in a given year. This legal document shows that the taxpayer has obliged the tax laws and has made the payments on time. Failing to submit the tax return will result in penalties and fines for the business. The pre-Covid fines for incorrect tax returns were AED 3000 for the first time and AED 5000 for repetitive incorrect tax returns. In contrast, post-Covid penalties have changed to AED 1000 for the first time and AED 2000 for the repetition.
Failure to maintaining books penalty amendments
The tax authorities may ask for the financial records and books anytime; it is very important to maintain them according to the given standard. Failure to maintain the books will result in penalties. The previous penalties for such mistakes were AED 10,000 for the first time and AED 50,000 for repetition. After the amendments, FTA will charge an amount of AED 10,000 for the first time and AED 20,000 for repetition. Get the help of experts to maintain your books according to VAT standards and the correct documents to avoid penalties.
Avoid penalties with expert help!
Regardless of whether there is a reduction in the fines and penalties after Covid. You must ensure that you are not facing any penalties. Get the services of VAT experts to help you deal with VAT matters to avoid penalty costs for your business.