If you’re running a business in the UAE, VAT compliance is one of those areas where small oversights can turn into surprisingly expensive mistakes.
A quick breakdown of the main penalties and where people usually get caught out:
1. Late VAT registration
If you cross the AED 375k threshold and don’t register within 30 days → AED 10,000 fine
This one hits startups scaling quickly.
2. Missing deregistration
If your revenue drops below AED 187,500 and you don’t deregister → starts at AED 1,000, then monthly penalties.
3. Late VAT return filing
Returns are due within 28 days after the tax period →
AED 1,000 (first time), AED 2,000 (repeat).
4. Late VAT payment
This is where it compounds:
- 2% immediately
- +4% monthly on outstanding tax
5. Incorrect VAT returns
Even unintentional errors can trigger fines:
AED 1,000 → AED 2,000 if repeated.
6. Poor record keeping
You need to maintain VAT records for 5 years →
AED 10,000 (first offence), up to AED 50,000.
7. Not issuing proper tax invoices
AED 5,000 per missing/non-compliant invoice.
8. Designated zone violations
Can go up to AED 50,000 or 50% of unpaid tax.
9. Incorrect info submitted to FTA
AED 3,000 → AED 5,000 for repeat issues.
10. Voluntary disclosure mistakes
If you catch an error early, penalties are lower.
If FTA finds it first, it can jump to 50% + monthly penalties.
Hope this helps. Happy to share more detail if anyone’s dealing with a specific case.