VAT Late Payment Penalty in UAE: Due Dates, Calculations and Examples

Flick team

Last updated at

June 11, 2025

The Ministry of Finance introduced Value Added Tax in the United Arab Emirates on 1 January 2018. Every business that is registered for VAT must follow the rules that apply under the tax law. If a business fails to meet these rules, then the Federal Tax Authority will apply a penalty based on the type of mistake.

The UAE Cabinet has issued a clear list of VAT fines for various forms of VAT non-compliance. These include issues like vat late registration, penalty for non-filing of VAT returns, and vat late payment penalties. In this article, we have shown the most common FTA VAT penalties in a simple table.

Penalties for Common VAT Violations in the UAE

Violation	Penalty Amount
Not displaying VAT-inclusive prices	AED 5,000
Not informing FTA when applying margin scheme	AED 2,500
Non-compliance with Designated Zone transfer rules	Higher of AED 50,000 or 50% of the unpaid tax
Not issuing tax invoices or alternate documents	AED 2,500 per instance
Not following e-invoice or e-credit note requirements	AED 2,500 per instance

Penalties for Non-Compliance with Tax Procedures

Violation	Penalty Amount
Not maintaining records as per law	AED 10,000 (first time) AED 20,000 (repeat)
Not submitting records in Arabic upon request	AED 20,000
Late VAT registration	AED 10,000
Late VAT deregistration	AED 1,000 per month (max AED 10,000)
Not updating FTA with changes to tax	AED 5,000 (first time) AED 10,000
Record	(repeat)
Not informing FTA about legal representative	AED 10,000 (payable by representative)
Legal representative failing to file return	AED 1,000 (first time) AED 2,000 (repeat within 24 months)
Taxable person failing to file return	AED 1,000 (first time) AED 2,000 (repeat within 24 months)

Penalties for Late VAT Payment

Penalty Type	Amount
One-time penalty	2% of unpaid tax (next day after due date)
Monthly penalty	4% of unpaid tax (charged monthly)
Maximum total penalty	Up to 300% of unpaid tax
Due date (Voluntary Disclosure)	20 business days from submission date
Due date (FTA Assessment)	20 business days from receipt date

Penalties for Incorrect Tax Returns

Violation	Penalty Amount
Submitting incorrect return	AED 1,000 (first time) AED 2,000 (repeat)
If tax difference is lower than above	Lesser of tax difference or AED 500
If return corrected before due date	No penalty

Voluntary Disclosure Penalties Based on Delay

Disclosure Timing	Penalty (% of Tax Difference)
Within 1 year	5%
Within 2 years	10%
Within 3 years	20%
Within 4 years	30%
After 4 years	40%

Penalties for Disclosure After Audit Notification

Component	Penalty
Tax difference	50% of the error amount
Monthly penalty on unpaid tax	4% per month (until tax assessment)
Monthly penalty on ineligible refund	4% per month (until tax assessment)

Additional Penalties

Violation	Penalty Amount
Not facilitating tax audit	AED 20,000
Not calculating tax on behalf of another (when required)	2% next day + 4% monthly (Max 300%)
Not accounting for VAT on imports	50% of unpaid or undeclared tax