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UAE VAT amnesty and revised penalties

COVID-19 economic disruption prompts VAT amnesty

The United Arab Emirates government has issued a Value Added Tax amnesty to reflect the continuing disruption under the coronavirus crisis. It has also given a revised penalty regime to reflect feedback from taxpayers since the Arab Gulf staff launched its 5% regime at the start of 2018. Any late filing penalties will be due 20 days after the submission of the voluntary declaration of the receipt of a tax assessment. Previously, the payment had been immediate or backdated in some cases.

The amnesty will provide for a reduction in penalties on late returns or unpaid VAT of up to 70% of the amount due. The reduction in fines will apply:

  • Late VAT filing
  • Any fine on voluntary disclosures
  • Delayed remittance of VAT due
  • Audit fines

UAE has generally maintained much harsher penalties than Saudi Arabia, but not as draconian as the other members of the Arab Gulf Cooperation Council which agreed to form a VAT union – Oman and Bahrain. These changes, replacing the harsh ‘2-4-1’fines regime will avoid large fines for purely administrative oversights by taxpayers. The old regime inflicted automatic fines of AED 5,000 and potentially over 300% charges.

You can check the right VAT calculations on individual or batch transactions with our Advisor and Auditor services.

 

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