Even experienced businesses can slip up when it comes to VAT compliance. These common errors could lead to financial penalties or operational delays—here’s how to avoid them.

1. Delayed VAT Registration
Failing to register on time can result in fines of up to AED 10,000. Monitor your revenue carefully and initiate registration once you cross the threshold.

2. Issuing Incorrect Tax Invoices
A valid tax invoice must include:

• TRN (Tax Registration Number)
• Invoice date
• Description of goods/services
• VAT amount clearly shown

Incomplete invoices can be rejected and impact your VAT return.

3. Incorrect VAT Rates
Misapplying the VAT rate—especially on zero-rated or exempt items—can cause underpayment or overpayment issues. Always refer to FTA’s latest VAT guidance for clarification.

4. Ineligible Input Tax Claims
Some expenses are not eligible for input VAT recovery. Know what qualifies, and double-check your claims before filing.

5. Late Filing and Payment
Late VAT returns incur a fine of AED 1,000 for the first offense and AED 2,000 for repeated offenses. Ensure timely submission and payment to avoid escalating penalties.

Pro Tip: Regular VAT audits and consulting a tax advisor can save you time, money, and legal trouble.