What is the penalty for late VAT registration?

Article 8 – Publication This Decision shall be published in the Official Gazette. Cabinet Decision No. 40 of 2017 and its amendments – As published by the Ministry of Finance 4 Table No. 1 On Violations and Administrative Penalties related to the Implementation of Tax Procedures Law2 No. Description of Violation Administrative Penalty in AED 1 Failure of the Person conducting Business or who has an obligation under the Tax Procedures Law or the Tax Law to keep the required records and other information specified in the Tax Procedures Law and the Tax Law. One of the following two penalties shall be imposed: 1. 10,000 for each violation. 2. 20,000 in each case of repeated violation within 24 months from the date of the last violation. 2 Failure of the Person conducting 5,000 Business or who has an obligation under the Tax Procedures Law or the Tax Law to submit the data, records, and documents related to tax in Arabic to the Authority when requested. 3 Failure of the Taxable Person to submit a 10,000 registration application within the timeframe specified in the Tax Law. 4 Failure of the Registrant to submit a 1,000 in case of late submission of the deregistration application within the application and on the same date timeframe specified in the Tax Law.3 monthly, up to a maximum of 10,000. 5 Failure of the Registrant to inform the Authority of any case that may require the amendment of the information pertaining to his tax record kept by Authority. One of the following two penalties shall be imposed: 1. 1,000 for each violation. 2. 5,000 in each case of repeated violation within 24 months from the date of the last violation. 2 Table amended as per Cabinet Decision No. 129 of 2025 (effective from 14 April 2026). 3 In accordance with Cabinet Decision No. 49 of 2021, if any penalty is to be imposed on the same date monthly, the date for a month that does not contain a corresponding date shall be considered as the first day of the following month. The penalty for all other months shall be imposed on the date the monthly penalty was first imposed. Cabinet Decision No. 40 of 2017 and its amendments – As published by the Ministry of Finance 5 6 Failure of the Legal Representative of the 1,000 Taxable Person to provide Notification of their appointment within the specified timeframes, in which case the Penalties will be due from the Legal Representative’s own funds. 7 Failure of the Legal Representative for 1,000 for the first time. the Taxable Person to file a Tax Return 2,000 in case of repetition within 24 within the specified timeframes, in which months. case the Penalties will be due from the Legal Representative’s own funds. 8 Failure of the Registrant to submit the 1,000 for the first time. Tax Return within the timeframe 2,000 in case of repetition within 24 specified in the Tax Law. months. 9 Failure of the Taxable Person to settle 1. A monthly penalty of (14%) per the Payable Tax within the timeframe annum, for each month or part 4 specified in the Tax Law. thereof, imposed on the unsettled Payable Tax amount from the day following the due date of payment and on the same date monthly thereafter. 2. For the purposes of this penalty, the due date of payment in the case of the Voluntary Disclosure and Tax Assessment, shall be as follows: a. 20 business days from the date of submission, in the case of a Voluntary Disclosure. b. 20 business days from the date of receipt, in the case of a Tax Assessment. 4 In accordance with Cabinet Decision No. 49 of 2021, if any penalty is to be imposed on the same date monthly, the date for a month that does not contain a corresponding date shall be considered as the first day of the following month. The penalty for all other months shall be imposed on the date the monthly penalty was first imposed. Cabinet Decision No. 40 of 2017 and its amendments – As published by the Ministry of Finance 6 10 The Registrant submits an incorrect Tax 500, unless the Registrant takes one of Return. the following actions: 1. Corrects his Tax Return within the deadline specified for submitting the Tax Return pursuant to the Tax Law. 2. Submits a Voluntary Disclosure to correct the Tax Return without resulting in a difference in the amount of Due Tax. 11 The submission of a Voluntary Disclosure by the Taxable Person or the Taxpayer on errors in the Tax Return, Tax Assessment or tax refund application pursuant to Clauses 1 and 2 of Article 10 of the Tax Procedures Law. A monthly penalty of 1% on the Tax Difference, for each month or part thereof, to be applied as of the date following the due date of the Tax Return, or submission of the relevant tax refund application until the date of the Voluntary Disclosure is submitted. 12 Failure of the Taxable Person or the Taxpayer to submit a Voluntary Disclosure in relation to errors in the Tax Return, Tax Assessment, or tax refund application before being notified by the Authority that it will be subject to a Tax Audit. The two following penalties shall be imposed: 1. A fixed penalty of 15% on the Tax Difference. 2. A monthly penalty of 1% on the Tax Difference, for each month or part thereof, to be calculated as follows: a. Where the Taxable Person submits a Voluntary Disclosure after being notified that it will be subject to a Tax Audit by the Authority, the penalty shall be imposed for the period from the day following the due date of the Tax Return, or the submission of the relevant tax refund application until the date of submitting the Voluntary Disclosure. b. Where the Taxable Person fails to submit a Voluntary Disclosure, the Cabinet Decision No. 40 of 2017 and its amendments – As published by the Ministry of Finance 7 penalty shall be imposed as of the date following the due date of the Tax Return, or the submission of the relevant tax refund application until the date of issuance of the Tax Assessment. 13 Failure of the Person subject to Tax 20,000 Audit, his Tax Agent, or Legal Representative to offer facilitation to the Tax Auditor in violation of the provisions of Article 20 of the Tax Procedures Law, provided that the penalties in this case will be due from the Person’s, his Legal Representative’s, or Tax Agent’s own funds, as applicable. 14 Failure of the Registrant to calculate tax 1. A monthly penalty of 14% per annum, on behalf of another Person where the for each month or part thereof, Registrant Taxable Person is obliged to imposed on the unsettled amount of 5 do so under the Tax Law. Payable Tax, from the day following the due date of payment and on the same date monthly thereafter. 2. For the purposes of this penalty, the due date of payment in the case of the Voluntary Disclosure and Tax Assessment, shall be as follows: a. 20 business days from the date of submission, in the case of a Voluntary Disclosure. b. 20 business days from the date of receipt, in the case of a Tax Assessment. 5 In accordance with Cabinet Decision No. 49 of 2021, if any penalty is to be imposed on the same date monthly, the date for a month that does not contain a corresponding date shall be considered as the first day of the following month. The penalty for all other months shall be imposed on the date the monthly penalty was first imposed. Cabinet Decision No. 40 of 2017 and its amendments – As published by the Ministry of Finance 8 15 The failure of the Person to calculate any 50% of the unpaid or undeclared Tax. tax that may be due on the import of goods as per the Tax Law. Table No. 2 On Violations and Administrative Penalties related to the Implementation of Federal Decree-Law No. 7 of 2017 on Excise Tax6 No. Description of Violation Administrative Penalty in AED 1 Failure of the Taxable Person to display 5,000 prices inclusive of Tax. 2 Failure to comply with the conditions and procedures of transferring Excise Goods from a Designated Zone to another Designated Zone, and the mechanism of preserving, storing, and processing such Excise Goods. 3 Failure of the Taxable Person to provide 5,000 for the first time. the Authority with the price lists of the 10,000 in case of repetition. Excise Good that it produces, imports or sells. The penalty shall be the higher of 50,000 or 50% of the Tax, if applicable, chargeable on the goods in relation to the violation. Table No. 3 On Violations and Administrative Penalties related to the Implementation of Value Added Tax Law7 No. Description of Violation Administrative Penalty in AED 1 Failure of the Taxable Person to display 5,000 prices inclusive of Tax. 2 Failure of the Taxable Person to notify 2,500 the Authority of applying tax based on 6 Table amended as per Cabinet Decision No. 49 of 2021. 7 Table amended as per Cabinet Decision No. 129 of 2025 (effective from 14 April 2026). Cabinet Decision No. 40 of 2017 and its amendments – As published by the Ministry of Finance 9 Margin. 3 Failure to comply with the required conditions and procedures related to keeping the Goods in a Designated Zone or moving them to another Designated Zone. 4 Failure of the Taxable Person to issue a 2,500 for each detected case. Tax Invoice or the alternative document when making any supply within the period legally specified. 5 Failure of the Taxable Person to issue a 2,500 for each detected case. Tax Credit Note or the alternative document within the period legally specified. 6 Failure of the Taxable Person to comply 2,500 for each detected case. with the conditions and procedures regarding the issuance of a Tax Invoice and a Tax Credit Note electronically. The penalty shall be the higher of 50,000 or 50% of the Tax, if applicable, chargeable on the goods in relation to the violation. Cabinet Decision No. 40 of 2017 and its amendments – As published by the Ministry of Finance 10

Article 7 – Mandatory Registration 8 1. The Mandatory Registration Threshold shall be AED 375,000 (three hundred and seventy-five thousand dirhams). 2. The Person required to register for Tax pursuant to the provisions of the DecreeLaw must file a Tax Registration application with the Authority within 30 (thirty) days of being required to register. 3. Where a Person does not file his Tax Registration application despite being required to, the Authority shall register that Person with effect from the date on which the Person first became liable to be registered for Tax and impose the necessary penalties in accordance with the Tax Procedures Law. 4. Where supplies made by a Person exceed, in accordance with the Decree-Law, the Mandatory Registration Threshold during the previous 12-month period, the Authority shall register the Person with effect from the first day of the month following the month in which the Person is required to register, whether or not he applies for Tax Registration, or from such earlier date as agreed between the Authority and the Person. 5. Where a Person expects that his supplies, in accordance with the Decree-Law, will exceed the Mandatory Registration Threshold during the next 30 (thirty) days, the Authority shall register him with effect from the date on which there are 8 Article amended as per Cabinet Decision No. 100 of 2024. Cabinet Decision No. 52 of 2017 and its amendments – As published by the Ministry of Finance 6 reasonable grounds for believing the Person will be required to register for Tax as specified in this Clause, whether or not he so notifies them of the liability to register for Tax, or from such earlier date as agreed between the Authority and the Person. 6. Where a Person is not a resident of the State and is required to register for Tax in accordance with the provisions of the Decree-Law, the Authority shall register him with effect from the date on which he started making supplies in the State, whether or not he so notifies them of the liability to register for Tax, or from such earlier date as agreed between the Authority and the Person. 7. A Taxable Person who has been late in registering for Tax according to the provisions of this Article is liable to account for and pay to the Authority the Due Tax on all Taxable Supplies and Imports made by him before registering.