How Can You Avoid VAT Fines and Penalties in UAE?

VAT or Value added tax is a type of consumption Tax collected on a product at every stage of production. However, the VAT paid by the customer is based on the actual cost of the product which doesn’t include the VAT paid during production. VAT is vital for a country’s economic growth as it increases the revenue of the government without putting an excessive burden on the manufacturer as well as the customer. Now moving on to the VAT fines which have a completely different story and can be a big issue. In the next part of this blog, we will learn about the VAT fines and penalties in the UAE.

Causes of VAT Fines and Penalties

VAT fines in the UAE are imposed on businesses that fail to follow the rules and regulations imposed. To prevent VAT penalties in the UAE, businesses must ensure compliance with Federal Tax Authority’s (FDA) VAT regulations. And another thing that can help you avoid VAT fines and penalties is opting for VAT consultation from experts.

How can you avoid VAT fines and penalties?

There are seven ways that can help you avoid VAT fines in the UAE:

  1. You have to opt for VAT registration if you are making an annual revenue of more than 367,000 AED.
  2. You have to file a VAT return monthly if your business has an annual turnover of 150 million AED. Otherwise, you have to file quarterly.
  3. For each supply, make sure to have the TAX invoice issued within 14 days of the date of supply. Make sure that it has the name, address, and TRN of the registrant that is making the supply.
  4. Keep clear records of every business transaction including income, cost, and other VAT charges. Moreover, make sure to keep the record up-to-date.
  5. Collect VAT from your customers on the goods and services you are offering.
  6. Understand how reverse charges work and ensure compensation for them.
  7. Know whether your business falls under the category of exempted suppliers and make compensating according to that.

Where can you file VAT in the UAE?

The VAT filing process in the UAE is extremely easy. You can file it electronically through the FTA online portal. It is advised to make sure you have met all the taxation requirements beforehand.

Why do you need to hire a VAT consultant in the UAE?

Filing VAT is a complex process! It requires you to ensure proper management and recording of your invoices, stocks, bills, and more. Professional and experienced VAT consultants can help you in complying with UAE’s VAT requirements with ease. Failing to comply with the rules and requirements can make you end up with hefty fines which can ruin the entire structure of your business.

With this, we are concluding this post here. If you have any more doubts or concerns pertaining to VAT, feel free to get in touch with the experts.

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    It is crucial to comprehend the distinction between obtaining a license with a visa quota and acquiring residency in the UAE. A license with a visa quota solely covers the expenses related to a business license and visa quota, with the possibility of including a Flexi office lease in certain Freezones. However, possessing a visa quota does not automatically grant you UAE residency; additional steps must be completed. If you wish to apply for a partner/investor visa, there are supplementary costs involved. These include obtaining an immigration card, registering for E-channel (NE Only), and paying fees for visa, visa processing, medical examination and Emirates ID typing. To effectively plan your business expenses, it is imperative to ask the right questions from the beginning to avoid surprises and hidden costs.