Amnesty Scheme for VAT
The following changes were made under the amnesty scheme for VAT in UAE:
Waiver of Existing VAT Penalties:
70% reduction in the tax penalties if the following three conditions have been met:
- The administrative penalty must be imposed under Cabinet Decision No of 2017 on Administrative penalties for violating Tax laws in the UAE before 28 June 2021
- The tax registrant settles all payables by 31 December 2021
- The tax registrants must pay 30% of unsettled administrative penalties payable on 28 June on or before 31 December 2021
Amendment of VAT Penalties post 28th June 2021
Late registration Penalty has been amended as follows:
Previous penalty: AED 20,000
After Amendment: AED 10,000
Submitting Voluntary Disclosures:
The penalty was calculated before the amendment based on difference between the tax that should have been paid and the tax that’s actually paid
The new penalty calculation is as follows:
- 5% on the difference where the Voluntary Disclosure is submitted within one year from due date of submission of the Tax return, the Tax Assessment, or the relevant application.
- 10% on the difference where the voluntary disclosure is submitted within the second year following the due date of submission of the Tax return, the tax assessment, or the relevant refund application.
- 20% on the difference where the voluntary disclosure is submitted within the third year following the due date of submission of the Tax return, the tax assessment, or the relevant refund application.
- 30% on the difference where the voluntary disclosure is submitted within the fourth year following the due date of submission of the Tax return, the tax assessment, or the relevant refund application.
- 40% on the difference where the voluntary disclosure is submitted after the fourth year following the due date of submission of the Tax return, the tax assessment, or the relevant refund application.
- Penalty for voluntary disclosure:
AED 3000 for first voluntary disclosure
AED 5000 for every other voluntary disclosure after
AED 1000 for first voluntary disclosure
AED 2000for every other voluntary disclosure after
Late Payment Penalty:
- 2% of the unpaid tax on the day following the due date of the payments
- 4% monthly penalty is due after one month from the due date of payment. And on the same date monthly thereafter, on the unsettled Tax amount to date
The VAT penalty can go up to a maximum of 300%
Penalty for Late Payment after Voluntary Disclosure:
Now the taxpayer will be given 20 business days from the date of the submission of the voluntary disclosure. After which the same late payment penalty discussed above will apply.
Penalty for Late return Filing:
The VAT penalty for not filing VAT within the specified timeframe remains the same at AED 1000 for the first return and AED 2000 in the case of repetition within a 24-month period.
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