SKP Group
SKP GCC VAT Alert
6 October 2017
Administrative fees and penalty under VAT

The Council’s meeting held on 2 October 2017, chaired by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates (UAE), Ruler of Dubai has adopted Cabinet Decision No. (39) of 2017 on fees for services provided by the Federal Tax Authority (FTA) and Cabinet Resolution No. (40) of 2017 on administrative penalties for violations of tax laws in the UAE.

Fees for services provided by the FTA
  • It outlines the fees to be collected for the services provided by the FTA to its clients.
  • Tax registration services and issuance of an electronic tax registration certificate will be free of charge.
  • However, an attested paper registration certificate will carry a fee of AED 500, while registration and renewal fees for tax agents are set at AED 3,000 for three years.
  • Registration and renewal fee for an accounting software provider will be AED 10,000 for one year.
  • Registering a designated zone will cost AED 2,000 per year.
  • While there are no service fees associated with registering a warehouse keeper or issuing an electronic warehouse keeper registration certificate, an official printed certificate will cost AED 500.
Administrative penalties for violating tax laws in the UAE
  • It applies to all violations of tax procedures law, excise tax, and Value Added Tax (VAT).
  • The minimum and maximum penalty must be AED 500 and three times the value of the tax on the transaction in question respectively.
  • A penalty shall be in addition to the tax due.
  • Key penalties are listed below:
    Offence Penalty (in AED)
    Failure to maintain required records 10,000 for the first time
    50,000 in case of repetition
    Failure to submit a registration application within the timeframe specified by a taxable person 20,000
    Failure to submit tax return within the timeframe specified by a taxable person 1,000 for the first time.
    2,000 in case of repetition within 24 months.
  • It also provides interest rate schedule for calculating the penalty amount in case of late payment of tax.
The detailed directory of administrative fee and penalties can be viewed in the press release section on www.tax.gov.ae.
SKP comments
From the above-stated press release, it is evident that under the UAE VAT Law it would be critical to comply with the compliances prescribed and maintain the requisite records. Furthermore, it would be crucial for businesses to understand the requirement of such VAT compliance, obtain VAT registration in time and maintain all the requisite records to mitigate any exposure to penalties and fines.

Separately, taxpayers would also be required to evaluate the impact of VAT and chalk down the action plan for smooth transition to VAT regime and make requisite VAT implementation and impact related changes in the business to ensure a smooth transition without any disruption in the VAT era.
SKP
Emirates Financial Towers | 503-C South Tower | DIFC | PO Box 507260 | Dubai | UAE
+91 22 6730 9000 |
skp.uae@skpgroup.com | www.skpgroup.com

 
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