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Penalties in The UAE For VAT Deregistration

The revocation of a taxable entity's VAT registration is known as VAT deregistration in the UAE. The registration will be cancelled after the Federal Tax Authority, or FTA, in the UAE accepts the application for VAT cancellation.
Businesses may apply for either voluntary or required VAT deregistration, in accordance with FTA requirements. A taxable entity must meet a number of qualifying requirements and conditions in order for the local tax office to authorize the deregistration, regardless of whether the VAT cancellation is optional or required.

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Potential Penalties in the UAE for VAT Deregistration

As the authorities must conduct many reviews before enabling the taxable entity to discontinue its registration, there are a number of penalties that a firm may incur when completing its VAT cancellation. The following are the most notable fines for transgressions that should be avoided:

1)    The fine is AED 10,000 for failing to process VAT deregistration on time or within the allotted amount of time established by the local tax office.


2)    The penalty for failing to keep records that the tax authorities want is AED 10,000 for a first offence and AED 50,000 for a second or subsequent infraction.


3)    AED 20,000 in fines will be assessed if the authority's required records are not provided in Arabic.


4)    Failure to notify FTA of a change to tax records that are requested for VAT deregistration may result in fines of AED 5,000 if it is the first offence and AED 15,000 if the taxable business has previously committed the same error of failing to notify the authority of changes to tax records.

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5)    Failure to notify FTA that a legal representative was designated by the company within the allotted term will result in a 20,000 fine for the legal representative.

6)    If a designated legal representative does to submit the tax return requested by the local tax authority within the required deadline, they will be subject to a penalty of AED 1,000 for the first violation and AED 2,000 for subsequent offences during a 24-month period.

7)    Submission of an improper final tax return will result in two penalties. If it is a first offence, the fixed penalty is AED 3,000; if it is a repeat crime, it is AED 5,000. The percentage-based penalty will be added to the FTA amount that is overdue as a result of the mistake (s). If the firm doesn't voluntarily notify the tax authority of the error or when it has previously been requested to do so by the FTA, 50% of the sum owed by the business will be due to the FTA. If the firm decides to make a voluntary disclosure after being informed of the error by the FTA, the percentage-based penalty will be equal to 30% of the sum owed by the business to the FTA. If the voluntary disclosure is made without waiting to hear from the FTA about an error, the percentage-based penalty will be 5% of the money payable to the FTA.
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8)    The fixed penalty is either AED 3,000 (for a first violation) or AED 5,000 (for a recurrent offence) for a business's voluntary disclosure of inaccuracies on any of its prior tax returns, refund applications, or tax assessments. The percentage-based penalty will either be 50% (for disclosing after an FTA review), 30% (for disclosing voluntarily after receiving notification from the FTA), or 5% (for disclosing voluntarily before receiving any information from the FTA).

9)    Failure by a taxable entity to assist an FTA auditor in their work or review will result in an AED 20,000 fine.

10)                        Failure of the taxable organization to follow procedures and requirements related to the issue of e-tax invoices and e-tax credit notes: AED 5,000 for each inaccurate document

11)                        A penalty of AED 5,000 will be assessed to the taxable firm for each document that is absent if it fails to issue tax credit notes or the alternative papers.

12)                        AED 5,000 will be charged if a taxable business fails to issue a document for a supply that is missing a tax invoice.

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