UAE’s Federal Tax Authority Announces Service Fees and Administrative Fines

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The UAE on Monday announced services fees and fines for non-compliance of value-added tax (VAT) laws as the country heads towards implementation of the consumer-focused taxation system from January 2018.

The regulations cover individuals, companies, tax agents and their legal representatives who come under the ambit of this new VAT regulations. The penalties range from as low as Dh3,000 and go up to Dh50,000 depending on the offenses committed by the entities or individuals.

As per the new regulations, if the person fails to keep required records and other information specified in the laws will be fined Dh10,000 in the first instance and Dh50,000 in case of repetition.

The law further states that if the person fails to submit data, records, and documents related to tax in Arabic to authority when requested, he would be penalized Dh20,000.

The UAE will implement 5 percent VAT – which is one of the lowest in the world – from next year on a host of goods and services as part of the GCC-wide agreement. As per the UAE regulations, companies that provide goods and services with an annual turnover of Dh375,000 or higher will be subject to VAT. While businesses with taxable supplies below Dh375,000 and above Dh187,500 will have the option to register. The UAE aims to raise Dh12 billion through VAT collections in the first year and Dh20 billion in the second year. Analysts and economist believe that the VAT will increase inflationary pressure in the country.

As part of the GCC deal, Saudi Arabia will also join the UAE from January 2018 while other Gulf nations will jump on the bandwagon at a later stage.

A press statement issued on Monday said the UAE Council of Ministers adopted Cabinet Decision No. 39 of 2017 on fees for services provided by the Federal Tax Authority and Cabinet Resolution No. 40 of 2017 on penalties for violations of tax laws in the UAE.

According to Federal Tax Authority, tax registration service and issuance of e-tax registration certificate will be free of charge but an attestation will incur a fee of Dh500. However, tax agents will have to pay Dhs 3,000 fee for registration and renewal for three years.

According to FTA, registration and renewal fee for an accounting software provider will be Dh10,000 for one year, whereas registering a Designated Zone will cost Dh2,000 per year.

However, there will be no service fee for registering a warehouse keeper or issuing an electronic warehouse keeper registration certificate. But an official printed certificate will cost Dh500.

You may refer to the following article for a complete list of the fines.