Al Faraz Accounting & Tax Consultants

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Warm congratulations to HH Sheikh Mohammed Bin Rashid Al Maktoum on the 20th Anniversary of Accession Day.

🔔 Major Updates to UAE VAT Penalties – What Businesses Should Know.

The FTA has revised VAT penalty calculations, reducing several penalties while keeping compliance conditions unchanged. These changes can significantly impact cash flow if managed properly.

Key highlights:
Late VAT Registration
Penalty reduced from AED 20,000 → AED 10,000

Late VAT De-registration
Now AED 1,000 per month, capped at AED 10,000
(previously a flat AED 10,000)

Voluntary Disclosure (VD)
Penalty reduced to AED 1,000 (first instance)
AED 2,000 for repetition
Early disclosure = lower risk & cost

Late Payment of VAT
• 2% immediately on unpaid tax
• 4% monthly on outstanding balance (instead of daily penalties)

Incorrect VAT Return
Penalty reduced to AED 1,000 (first offence)
AED 2,000 for repetition

Failure to Maintain Records
• First violation: AED 10,000
• Subsequent violations: AED 20,000

Failure to Update FTA Records
Penalty capped at AED 10,000 for repeated cases

Note:
These amendments reward early compliance and voluntary correction. Reviewing VAT filings and records now can help businesses avoid unnecessary penalties.

If you need a VAT health check or guidance on Voluntary Disclosures, feel free to connect.

Send a message to learn more

Year-end is approaching — quick question for business owners 👇

Are your accounts updated?
Is your VAT properly reconciled with bank & invoices?
Are you confident your records are audit-ready?

Many businesses realize too late that small gaps in bookkeeping or VAT can lead to penalties, audit issues, or compliance risks.

At Al Faraz Accounting & Tax Consultants, we help businesses stay compliant with:
✔ Accounting & Bookkeeping
✔ VAT & Corporate Tax (UAE)
✔ Audit & Assurance Support
✔ AML & ICV Compliance

If you want peace of mind before year-end — or know someone who might — feel free to comment “INFO” or send a message.