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Administrative Penalties in Dubai / U.A.E

What are Administrative Penalties?

Administrative penalties are monetary amounts imposed upon a person by the Federal Tax Authority (FTA) for breaching the provisions of the Tax Law.
Every taxable person is urged to fully comply with their VAT responsibilities. Administrative penalties for non-compliance and violations have been issued by Cabinet Decision No. (40) of 2017. The Federal Tax Authority shall issue administrative penalties assessment for a person and notify him within (5) five business days for any of the violations.

When shall Administrative Penalties be imposed?
Administrative Penalties shall be imposed on the violations listed in the tables (1), (2) and (3).

Tables of Violations and Administrative Penalties
Appendix to the Cabinet Decision No. (40) of 2017

Table (1): Violations and Administrative Penalties related to the Implementation of the Federal Law No. (7) of 2017 on Tax Procedures.

  Description of Violation Administrative Penalty      (AED)
1 The failure of the person conducting   Business to keep the    required records and other information specified in Tax
Procedures Law and the Tax Law.
(10,000) for the first time.
(50,000) in case of repetition.
2 The failure of the person conducting
Business to submit the data, records
and documents related to Tax in
Arabic to the Authority When
requested.
(20,000)
3 The failure of the Taxable Person to
submit a registration application within
the timeframe specified in the Tax
Law
(20,000)
4 The failure of the Registrant to submit
a deregistration application within the
timeframe specified in the Tax Law
(10,000)
5 The failure of the Registrant to inform
the Authority of any circumstance that
requires the amendment of the
information pertaining to his tax
record kept by Authority.
(5,000) for the first time.
(15,000) in case of repetition
6 The failure of the person appointed as
a Legal Representative for the
Taxable Person to inform the
Authority of his appointment within the
specified timeframe. The penalties will
be due from the Legal
Representative’s own funds.
(20,000)
7 The failure of the person appointed as
a Legal Representative for the
Taxable Person to file a Tax Return
within the specified timeframe. The
penalties will be due from the Legal
Representative’s own funds.
(1,000) for the first time.
(2,000) in case of repetition within (24)
months.
8 The failure of the Registrant to submit
the Tax Return within the timeframe
specified in the Tax Law.
(1,000) for the first time.
(2,000) in case of repetition within (24)
months.
9 The failure of the Taxable Person to
settle the Payable Tax stated in the submitted
Tax Return or Tax Assessment he was notified of,
within the timeframe specified in the Tax
Law.
The Taxable Person shall be obligated to pay a
late payment penalty consisting of:
-(2%) of the unpaid tax is due
immediately once the payment of
Payable Tax is late;
-(4%) is due on the seventh day
following the deadline for payment, on
-(1%) daily penalty charged on any amount that is
still unpaid one calendar month following the
deadline for payment with upper ceiling of (300%).
10 The submittal of an incorrect
Tax Return by the Registrant
Two penalties are applied:
1. Fixed penalty of:
(3,000) for the first time.
(5,000) in case of repetition
 
11 The Voluntary Disclosure by the
Person/Taxpayer of errors in the Tax
Return, Tax Assessment or Refund
Application pursuant to Article 10 (1)
and (2) of the Tax Procedures Law.
Two penalties are applied:
1. Fixed penalty of:
(3,000) for the first time.
(5,000) in case of repetition
12 The failure of the Taxable Person to
voluntarily disclose errors in the Tax
Return, Tax Assessment or Refund
Application pursuant to Article 10 (1)
and (2) of this the Tax Procedures
Law before being notified that he will
be subject to a Tax Audit.
Two penalties are applied:
1. Fixed penalty of:
(3,000) for the first time.
(5,000) in case of repetition
13 The failure of the Person conducting
Business to facilitate the work of the
Tax Auditor in violation of the
provisions of Article (21) of the Tax
Procedures Law.
(20,000)
14 The failure of the Registrant to calculate
Tax on behalf of another Person when the
registered Taxable Person is obligated to do so under the Tax Law
The Registrant shall be obligated to pay a late payment penalty consisting of:
(2%) of the unpaid tax is due immediately once the
payment of Payable Tax is late;
(4%) is due on the seventh day following the
deadline for payment, on the amount of tax which
is still unpaid.
(1%) daily penalty charged on any amount that is still
unpaid one calendar month following the deadline
for payment with upper ceiling of (300%).
15 A Person not accounting for any tax
that may be due on import of goods
as required under the Tax Law.
(50%) of unpaid or undeclared tax.

Table (2): Violations and Administrative Penalties related to the Implementation of the Federal Decree-Law No. (7) of 2017 on Excise Tax

  Description of Violation Administrative Penalty (AED)
1 Failure by the Taxable Person to display prices
inclusive of Tax.
(15,000).
2 Failure to comply with the conditions and
procedures related to transfer the Excise Goods
from a Designated Zone to another Designated
Zone, and the mechanism of processing and
storing of such Excise Goods.
The penalty shall be the higher of AED
(50,000) or (50%) of the tax, if any,
chargeable in respect of the goods as
the result of the violation.
3 Failure by the Taxable Person to provide the Authority with price lists for the Excise Goods
produced, imported or sold thereby.
(5,000) for the first time.
(20,000) in case of repetition

Table (3): Violations and Administrative Penalties related to the Implementation of the Federal Decree-Law No. (8) of 2017 on Value Added Tax

  Description of Violation Administrative Penalty (AED)
Failure by the Taxable Person to display
prices inclusive of Tax.
(15,000)
Failure by the Taxable Person to notify the
Authority of applying Tax based on the
margin.
(2500)
Failure to comply with conditions and
procedures related to keeping the Goods in a
Designated Zone or moving them to another
Designated Zone.
The penalty shall be the higher of AED
(50,000) or (50%) of the tax, if any,
chargeable in respect of the goods as the
result of the violation.
Failure by the Taxable Person to issue the
Tax invoice or an alternative document when
making any supply.
(5,000) for each tax invoice or alternative
document.
Failure by the Taxable Person to issue a Tax
Credit Note or an alternative document
(5,000) for each tax credit note or
alternative document.
Failure by the Taxable Person to comply with
the conditions and procedures regarding the
issuance of electronic Tax Invoices and
electronic Tax Credit Notes
(5,000) for each incorrect document.

Administrative Penalties shall not be less than 500 Dirhams for any violation and shall not exceed three times the amount of tax in respect of which the administrative penalty was levied.

Does a taxable person has a right to object to Administrative Penalties?

A taxable person has a right to object to Administrative Penalties imposed on him. The taxable person may submit a request to the authority to reconsider any of its decision issued in connection with him in whole or in part provided that the reasons are included within 20 business days from him being notified of the decision.

When can the FTA reduce or waive Administrative Penalties?

    The Federal Tax Authority may reduce or waive any administrative penalties imposed on any person whose violation of the provisions of the Law or Tax Law was proved, according to the following provisions:

  1. The Person has an excuse that is acceptable to the Authority.
  2. The Person provides evidence that justifies the excuse and the violation it caused, which led to the imposition of Administrative Penalties.
  3. The reduction or exemption application shall be notified to the Authority as per the mechanism specified by the Authority within 10 business days as of the end of the acceptable excuse.
  4. The Person shall not have been subject to any Administrative Penalties in the 2 years preceding the application.
  5. The Person shall demonstrate that they have corrected the violation.
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