Late Filing Penalties: What You Need to Know

⚠️ Late Filing Penalties: What You Need to Know Under UAE VAT Law

Filing VAT returns on time is a crucial obligation for every VAT-registered business in the UAE. The Federal Tax Authority (FTA) has laid down strict compliance measures, including administrative penalties for late filing or payment of VAT liabilities. Understanding these penalties is essential to avoid unnecessary fines and protect your business’s reputation.

In this blog, we’ll break down the late filing penalties under UAE VAT law, explain how they’re calculated, and share best practices to ensure timely compliance.

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📌 What Triggers VAT Late Filing Penalties?

You may incur penalties under the UAE VAT Law if you:

• Submit your VAT return after the due date

• Fail to pay the VAT liability by the deadline

• File a wrong or incomplete return and don’t rectify it in time

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💸 Late Filing Penalty Structure in the UAE

The penalties for late VAT filing are cumulative, and escalate based on the number of violations and the length of the delay.

1. Late Submission of VAT Return

• AED 1,000 for the first time

• AED 2,000 for each subsequent violation within 24 months

2. Late Payment of VAT Liability

• 2% of the unpaid tax is charged immediately after the deadline

• An additional 4% is charged after 7 days

• 1% daily penalty applies from the 8th day onwards, up to a maximum of 300%

Example:

If you owe AED 10,000 in VAT and delay payment by:

• 1 day → AED 200 penalty

• 7+ days → AED 600 additional

• After 15 days → Daily penalty of AED 100 starts accumulating

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⚖️ Legal Reference

All these penalties are governed under:

• Cabinet Decision No. 40 of 2017 on Administrative Penalties for Tax Violations in the UAE (amended by Cabinet Decision No. 49 of 2021)

• Federal Decree-Law No. 8 of 2017 on Value Added Tax

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🔁 Other Related VAT Offenses and Fines

Offense Penalty

Failure to register for VAT on time AED 10,000

Late deregistration AED 1,000/month (max AED 10,000)

Incorrect tax invoice format AED 5,000 per document

Non-submission of voluntary disclosures Up to 50% of tax difference + fixed fines

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🧠 How to Avoid VAT Penalties in the UAE

Here are some best practices to remain compliant:

✅ Maintain proper accounting records and reconcile regularly

✅ Set up calendar reminders for filing deadlines

✅ Assign a dedicated compliance officer or outsource to a tax consultant

✅ Use FTA’s EmaraTax portal to track return periods and pay electronically

✅ File voluntary disclosures promptly if errors are discovered

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📅 Summary: VAT Return and Payment Deadlines

Filing Frequency Deadline

Monthly Returns 28th of the following month

Quarterly Returns 28th of the month after quarter ends

Note: If the 28th falls on a weekend or public holiday, the next working day is considered the deadline.

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📞 Need Help?

Don’t let missed deadlines cost your business. At Sheikh Anwar Accounting & Auditing LLC, we offer:

• VAT return filing services

• Penalty analysis and review

• FTA reconsideration request assistance

• Compliance audits

📍 Dubai, UAE

📞 +971 58 562 1786

🌐 www.sa-auditors.com