UAE: Various Administrative Penalties for Violation of Tax Laws

(Summary of Cabinet Decision No.40 of 2017)

S.No Description of Violation Administrative Penalty in AED

1 The failure to keep the required records and other 10,000 for 1st time
information specified in Tax Procedures Law and the 50,000 in case of repetition
Tax Law
2 The failure to submit the data, records and 20,000
documents related to Tax in Arabic to the Authority
when requested
3 The failure to submit a registration application on 20,000
time
4 The failure to submit a deregistration application on 10,000
time
5 The failure to inform the Authority of any 5,000 of 1st time
circumstance that requires the amendment of the 15,000 in case of repetition
information pertaining to his tax records
6 The failure of a Legal Representative to inform the 20,000
Authority of his appointment within the specified
timeframe.
7 The failure of a Legal Representative to file a Tax 1,000 of 1st time
Return within the specified timeframe. 2,000 in case of repetition
within 24 months
8 The failure to submit the Tax Return within the 1,000 of 1st time
timeframe. 2,000 in case of repetition
within 24 months
9 The failure to settle the Payable Tax stated in the Late payment penalty consisting
submitted Tax Return or Tax Assessment, within the of:
timeframe specified in the Tax Law. - 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%.
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Only for information purpose, one must refer Cabinet Decision No.40 for 2017 before taking any action, opinion, view or stand.
 The submittal of an incorrect Tax Return by the Two penalties are applied:
10 Registrant. 1. Fixed penalty of:
and 3,000 for 1st time.
The Voluntary Disclosure by the Person/Taxpayer of 5,000 in case of repetition
11 errors in the Tax Return, Tax Assessment or Refund 2. Percentage based penalty
Application pursuant to Article 10 (1) and (2) of the based on a tax benefit:
Tax Procedures Law. 50% if the Registrant does
not make a voluntary
disclosure or he made the
voluntary disclosure after
being notified of the tax
audit and the Authority
has started the tax audit
process, or after being
asked for information
relating to the tax audit,
whichever takes place
first.
30% if the Registrant
makes the voluntary
disclosure after being
notified of the tax audit
and before the Authority
starts the tax audit.
5% if the Registrant
makes a voluntary
disclosure before being
notified of the tax audit
by the Authority.

12 The failure to voluntarily disclose errors in the Tax Two penalties are applied:
Return, Tax Assessment or Refund Application 1. Fixed penalty of:
pursuant to Article 10 (1) and (2) of the Tax 3,000 for the 1st time
Procedures Law before being notified that he will be 5,000 in case of repetition
subject to a Tax Audit. 2. 50% of the amount unpaid to
the Authority due to the error
resulting in a tax benefit for the
Person/Taxpayer.

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Only for information purpose, one must refer Cabinet Decision No.40 for 2017 before taking any action, opinion, view or stand.
13 The failure to facilitate the work of the Tax Auditor in 20,000
violation of the provisions of Article (21) of the Tax
Procedures Law.

14 The failure to calculate Tax on behalf of another The Registrant shall be obligated
Person when the registered Taxable Person is to pay a late payment penalty
obligated to do so under the Tax Law. 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 50% of unpaid or undeclared tax
on import of goods as required under the Tax Law.

Violations and administrative penalties related to the implementation of Excise tax

S.No Description of Violation
1 Failure by the Taxable Person to display prices
inclusive of Tax
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.
3 Failure by the Taxable Person to provide the
Authority with price lists for the Excise Goods
produced, imported or sold thereby.
Administrative Penalty (AED)
15,000
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.
50,000 for the 1st time
20,000 in case of repetition

Violations and administrative penalties related to the implementation of VAT

S.No Description of Violation Administrative Penalty (AED)
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Only for information purpose, one must refer Cabinet Decision No.40 for 2017 before taking any action, opinion, view or stand.
1 Failure by the Taxable Person to display prices 15,000
inclusive of Tax
2 Failure by the Taxable Person to notify the 2,500
Authority of applying Tax based on the
margin.
3 Failure to comply with the conditions and The penalty shall be the higher of AED
procedures related to transfer the Excise 50,000 or 50%)of the tax, if any, chargeable
Goods from a Designated Zone to another in respect of the goods as the result of the
Designated Zone. violation.
4 Failure by the Taxable Person to issue the Tax 5,000 for each tax invoice or alternative
invoice or an alternative document when document.
making any supply.
5 Failure by the Taxable Person to issue a Tax 5,000 for each tax invoice or alternative
Credit Note or an alternative document document.
6 Failure by the Taxable Person to comply with 5,000 for each incorrect document
the conditions and procedures regarding the
issuance of electronic Tax Invoices and
electronic Tax Credit Notes

Happy Reading
CA. Gaurav Garg, (M) +91 9899994934, (E) gaurav@jgarg.com

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Only for information purpose, one must refer Cabinet Decision No.40 for 2017 before taking any action, opinion, view or stand.