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Non-compliance with UAE VAT regulations can lead to fines and penalties imposed by the Federal Tax Authority (FTA). It is crucial for all taxpayers to understand the circumstances under which these penalties may be levied.
VAT penalties in the UAE are enforced for failure to comply with the administrative procedures outlined by UAE tax laws and regulations that taxable entities must follow.
VAT is a broad-based consumption tax applied to most goods and services. In response to the growing need for alternative revenue streams in an evolving economy, the UAE government introduced Value-Added Tax (VAT). Since its implementation in January 2018, VAT has been levied on nearly all goods and services in the UAE, with exemptions for certain sectors like healthcare, food, and education. Although the tax is ultimately borne by the end consumer, businesses are responsible for establishing the necessary systems, processes, and procedures to ensure full compliance with this legal obligation.
According to Article 26 of the UAE Company Law, all businesses are required to retain their accounting records for at least five years from the end of the financial year.
Under Article 348, failure to maintain proper and clear accounting records detailing the company’s transactions can lead to fines ranging from AED 50,000 to AED 500,000.
Additionally, as per Article 349, if a company does not keep its accounting records for the mandated five-year period, it could face penalties between AED 20,000 and AED 200,000.
All of the functions mentioned above require enhanced control and security when managing stock, invoices, and other records. Accountants are responsible for establishing a proper filing system, updating software, and ensuring timely collection and remittance of taxes, among other duties. In this regard, accountants play a crucial role in ensuring VAT compliance, as well as in maintaining accounts and records in accordance with company laws and regulations.
Litrix Business Solutions is a registered tax agent with the Federal Tax Authority and a trusted provider of expert tax services in the UAE, supporting a wide range of clients across various industries.
VAT fines in the UAE require prompt and careful attention. If your company is facing any VAT penalties, our team of experienced tax advisors is ready to help you navigate these challenges and work towards having the fines waived. We handle all VAT-related concerns, offering timely guidance on the latest VAT regulations and updates. Our qualified tax professionals have in-depth knowledge of UAE tax law and its practical application.
Understanding that every business is different, we provide customized solutions to address the unique needs of each client. Protect your business from VAT fines and ensure growth with Litrix Business Solutions!
