Stay VAT Compliant in the UAE with YUGA Accounting
The introduction of value-added tax (VAT) in the UAE in 2018 marked a significant shift in the country’s journey toward economic diversification and reducing dependence on oil-based revenue. Since its implementation, the Federal Tax Authority (FTA) has continued to release important updates and clarifications to guide businesses in adhering to VAT laws.
All VAT-eligible businesses in the UAE must register, file tax returns on time, and pay taxes accurately in line with the UAE’s VAT regulations.
Did you know there are strict VAT penalties for non-compliance in the UAE?
Failure to meet the standards set by the FTA can lead to substantial penalties and disrupt business operations.
Working with an FTA-approved tax consultancy like YUGA Accounting & Tax Consultancy ensures your business remains compliant and avoids unnecessary fines.
Let’s walk you through the key VAT-related penalties in the UAE, how they impact businesses, and how our expert team can help you avoid them.
Understanding VAT Penalties in the UAE
Value Added Tax (VAT) is a 5% indirect tax levied on the majority of goods and services in the UAE. The FTA imposes fines to ensure businesses remain compliant with the law and maintain transparent financial reporting.
Key Steps to Avoid VAT Fines:
1. Timely VAT Registration
Businesses whose taxable supplies or imports exceed AED 375,000 must register for VAT without delay.
👉 Failure to register on time may result in fines up to AED 10,000.
At YUGA Accounting, we monitor your revenue and ensure timely VAT registration.
2. Maintaining Accurate Records
Businesses are required to retain all tax-related documents for at least five years from the end of the tax period.
👉 These records are essential for submitting tax returns and claiming input tax.
We ensure your financial records meet FTA’s standards and are audit-ready.
3. Timely Filing of VAT Returns
VAT returns must be submitted by the 28th day of the month following each tax period.
👉 Late filing attracts a fine of AED 1,000 for the first instance and AED 2,000 for each subsequent delay.
Our team ensures your returns are prepared and filed accurately on time.
4. Issuing Proper Tax Invoices
A tax invoice must be issued within 14 days of supplying goods or services.
👉 Failure to do so may lead to a fine of up to AED 2,500 per invoice.
We implement systems to help you issue VAT-compliant invoices on time.
5. Staying Updated with VAT Regulations
UAE tax laws and regulations are subject to change. Keeping up with the latest updates is essential.
YUGA Accounting continuously monitors FTA announcements and ensures you stay informed and compliant.
6. Employee VAT Training
Accounting and invoicing teams should be well-versed in VAT categories (standard, zero-rated, and exempt), invoice rules, and tax calculations.
We offer tailored VAT training sessions to minimize human error and boost compliance.
Common VAT Mistakes to Avoid:
Late VAT Registration—Missing deadlines invites automatic penalties.
Incorrect Data Submission—Incomplete or inaccurate records cause delays and attract fines.
Wrong Tax Rate Application—Misclassifying goods or services can lead to under/overpayment.
Manipulated Financials—Intentional misreporting is considered tax evasion and is severely punished.
Invalid Invoices— Not including mandatory information or using non-compliant formats results in penalties.
Why Choose YUGA Accounting for VAT Support?
At YUGA Accounting & Tax Consultancy, we are an FTA-approved tax consultancy firm providing expert VAT solutions across the UAE. Our experienced team ensures your business stays fully compliant, reducing the risk of fines and optimizing your tax processes.
Whether you’re just getting started with VAT or need support managing ongoing compliance, YUGA Accounting offers you:
✅ Expert guidance ✅ Timely filing and documentation ✅ Compliance assurance ✅ Training for your staff ✅ Reliable ongoing support
FOR MORE INFORMATION, CONTACT US:
Phone: +971 52 1952 532 / +971 4 240 1110
Mail ID: info@yugaaccounting.com
Website: www.yugaaccounting.com