10 Expert Tips to Stay Penalty-Free on VAT Payments in the UAE

VAT-registered businesses in the UAE are required to file accurate VAT returns and remit payable tax within the deadlines prescribed by the UAE Federal Tax Authority (FTA). Any delay in VAT payment can result in escalating penalties and increased financial exposure under UAE VAT regulations.

Implementing best practices in VAT accounting—supported by proper record-keeping and ongoing compliance monitoring—helps businesses minimize these risks. With evolving VAT laws and heightened FTA scrutiny, working with a certified VAT consultant in the UAE is essential to ensure accurate filings, timely payments, and effective penalty mitigation.

Jaxa Chartered Accountants is a leading VAT advisory firm in the UAE, providing end-to-end VAT compliance services fully aligned with UAE VAT legislation and FTA guidelines.

VAT Late Payment Penalties Under UAE FTA Regulations (2026)

Businesses must register for VAT in the UAE  if the taxable revenue exceeds AED 375000 annually. Timely VAT payments are essential for maintaining compliance with the UAE FTA. Failure to comply with UAE VAT payment timelines exposes the business to escalating penalties imposed by the UAE FTA.

As per the amended UAE VAT framework applicable from April 14, 2026, the late payment penalty structure is as follows:

1. 14% per annum penalty is imposed immediately on the unpaid VAT amount after the due date
2. There is no cap on the delay penalties.

To avoid VAT late payment penalties in the UAE, businesses must maintain accurate financial records, monitor FTA deadlines, and ensure the timely settlement of VAT dues. Engaging with an experienced UAE VAT consultant and FTA-approved tax agent like Jaxa helps ensure accurate compliance and penalty-free operations.

Who is Liable to Pay VAT in the UAE?

VAT in the UAE applies to businesses according to their taxable activities and revenue threshold. The entities that are required to register and pay VAT in the UAE are:

• Mandatory VAT registration: Required for businesses whose taxable supplies and imports exceed AED 375,000 per year.
• Voluntary VAT Registration: Businesses with a turnover between AED 187500 and AED 375000 may choose to register for VAT in the UAE
• Foreign entities: Non- UAE businesses providing taxable goods or services in the UAE must consider VAT registration once they start making supplies.

What Happens if VAT is Not Paid in the UAE?

Failure to pay VAT on time in the UAE can result in penalties, fines, and legal consequences. VAT-registered businesses in the UAE are required to submit VAT returns and VAT liability to the UAE FTA within 28 days after the end of the tax period. Late VAT payments may trigger:

• Late Payment Penalties: 14% per annum immediately after the due date on unpaid VAT.
• Administrative Fines: For late returns or poor record-keeping.
• Reputation: Repeated delays can harm business credibility.
• Legal Action: Significant unpaid VAT may lead to FTA legal proceedings.

Trust Jaxa’s certified VAT consultant in the UAE, having 18 years of experience to navigate UAE VAT with precision, compliance, and risk-free.

Your Guide to UAE VAT Filing Dates

The FTA applies VAT filing schedules for businesses based on their annual taxable supplies.

1. Quarterly filings: Standard for most small and medium-sized businesses requiring VAT returns every three months.
2. Monthly filing: Those businesses with high annual taxable supplies exceeding AED 150 million must file VAT returns in the UAE monthly.

Submission and Payment Deadlines

VAT returns and payments are due by the 28th day of the month following the end of the tax period. If the deadline falls on a weekend or a public holiday, the due date gets extended to the succeeding day following the holiday.

Meeting these deadlines helps businesses to avoid penalties or interest imposed by the UAE FTA.

Top Reasons for VAT Penalties in the UAE

Delays in VAT payment can result in penalties under the UAE VAT law due to the following common reasons:

• Missing the VAT Return Filing Deadline:
  The most common cause of penalties is failing to submit the VAT return by the deadline specified by the UAE Federal Tax Authority (FTA).
• Errors or Omissions in VAT Returns:
  Inaccurate, incomplete, or incorrectly reported VAT returns may lead the FTA to impose penalties and require return amendments.
• Late Payment of VAT Due:
  Even when UAE VAT returns are filed on time, penalties apply if the payable VAT amount is not settled by the prescribed due date.
• Improper Record-Keeping:
  Incomplete or disorganised accounting records can result in calculation errors and delays in filing, increasing the risk of fines.
• Lack of Awareness of UAE VAT Regulations:
  Limited knowledge of current UAE VAT laws, updates, or FTA guidelines can lead to non-compliance, errors, or missed deadlines.

Stay Ahead of Deadlines: 10 Tips to Prevent VAT Penalties in the UAE

Here’s how you can prevent VAT late payment penalties in the UAE

1. Keep Your financial records Organized and Up to date:

• Document every transaction with supporting invoices and receipts
• Stay ahead of penalties with automated VAT tracking and reporting.

2. Plan Your VAT Compliance Timelines:

Keep a calendar or software for every VAT return and payment deadline to prevent late penalties.

3. Check your accounts regularly:

Regularly reconcile accounts to prevent VAT mistakes and missed deadlines

4. Plan VAT payments ahead:

   Plan VAT payments to stay compliant and prevent penalties.

5. Avoid Last Minute VAT filing:

   Submitting VAT returns early reduces the risk of last-minute errors, ensures smooth processing, and timely payment.

6. Monitor VAT compliance regularly:

   Periodic internal checks help identify calculation errors and reporting gaps before they attract penalties or FTA scrutiny.

7. Follow official VAT guidance: 

   Keeping track of UAE VAT and FTA notifications and updates prevents filing errors and missed compliance requirements.

8. Assess VAT group Eligibility:

   Through VAT grouping, eligible businesses can manage VAT jointly, reducing administrative burden and compliance complexity.

9. Digitize your VAT compliance:

• Technology-driven VAT compliance reduces risk and delays.
• Use digital tools to keep VAT records accurate and compliant.

10. Get VAT right with experts:

    Engage with a top VAT consultant in the UAE for guidance on error-free VAT compliance and meet FTA requirements confidently.

Choose the best VAT services in the UAE.

Adopting these ten VAT compliance strategies helps businesses reduce exposure to VAT late payment penalties and streamline VAT return filing in the UAE. From both a compliance and financial perspective, timely VAT payment is essential, as delayed payments can trigger escalating penalties and negatively impact a company’s financial position.

Jaxa Chartered Accountants, a leading accounting and auditing firm in the UAE, brings decades of experience through its team of VAT consultants and advisors, assisting clients in managing their VAT obligations effectively.

Our services include:

• VAT registration and deregistration in the UAE
• VAT compliance support
• Assistance from the UAE FTA tax agent
• VAT penalty waiver requests
• VAT refund and recovery guidance
• VAT audit support
• Pre-VAT health checks
• VAT compliance calendar and deadline management

Get expert VAT guidance and stay fully compliant with UAE FTA regulations. Don’t risk penalties—take control of your VAT compliance today. Talk to our experts.