FTA Tightens Penalties for Late VAT Reconciliation in the UAE

 

FTA Tightens Penalties for Late VAT Reconciliation in the UAE

The UAE Federal Tax Authority (FTA) has intensified its enforcement measures on late and inaccurate VAT reconciliation, signalling a stronger push toward compliance and financial transparency across the business landscape. This move comes at a time when the UAE is strengthening its overall tax ecosystem, especially with the integration of Corporate Tax and the anticipated rollout of e-invoicing.

The FTA has announced that businesses failing to submit VAT returns on time will now face more immediate and higher penalties. The fine for the first late submission remains AED 1,000, but repeated delays may result in significantly increased charges. Authorities have emphasised that timely filing is essential for maintaining compliance and reducing discrepancies in national tax records.

In addition to late submissions, the FTA is placing greater scrutiny on the accuracy of VAT reconciliation. Companies are now expected to maintain precise alignment between their accounting records and VAT declarations, including sales invoices, purchase invoices, input VAT, output VAT, adjustments, and credit notes. Any mismatch may trigger administrative penalties or detailed compliance reviews.

The FTA has also highlighted the need for businesses to keep their registration details updated. Companies that fail to update changes in management, business address, ownership structure, or TRN-related information risk being penalized under the revised enforcement approach. The emphasis is on ensuring that the FTA has accurate and current data for all registered taxpayers.

These strengthened controls reflect the UAE’s broader goal of improving tax governance and reducing filing errors. With Corporate Tax now in effect and e-invoicing expected soon, accurate VAT reporting has become an essential compliance requirement for all businesses operating in the Emirates. The enhanced enforcement aims to create a more transparent and reliable tax environment for both regulators and the private sector.

Businesses are encouraged to adopt strong internal controls, conduct monthly VAT reconciliations, and ensure their accounting systems are fully aligned with regulatory requirements. Maintaining proper documentation, reviewing VAT ledgers regularly, and responding promptly to FTA updates will help companies avoid unnecessary penalties and stay compliant in the evolving tax landscape.

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