The NBR has approved a list of administrative penalties that will be imposed on taxpayers for infringement of the VAT laws.
- Administrative penalties
- Appealing an administrative penalty
- Tax evasion
- Penalties for tax evasion
Here are the administrative penalties that may be imposed on non-compliant taxpayers for the following violations:
- Failing to register with the NBR within 60 days of the registration deadline: the taxpayer will be fined an amount up to BHD 10,000.
- Filing a delayed VAT return or making late VAT payments (not exceeding 60 days): the taxpayer will be fined 5-25% of the value of the tax amount declared or paid.
- Submitting false information regarding imports or supplies, where the actual value is higher than the value declared by the taxpayer in the tax return: the taxpayer will be fined 2.5-5% of the unpaid tax amount per month.
Taxpayers involved in the following violations will be fined up to BHD 5000:
- Obstructing the NBR authorities from carrying out their duties
- Failing to notify the NBR about changes made to a submitted VAT registration application or a VAT return
- Failing to display the prices of goods and services inclusive of VAT
- Failing to provide information requested by the NBR
- Failing to abide by the rules involved in issuing a VAT invoice
- Violating any other provision of the VAT laws laid down by the NBR
Appealing an administrative penalty
A taxpayer can appeal an administrative penalty imposed on them within 30 days from the date of notification. To do this, they must file an objection with the Tax Appeal Review Committee. The Committee will then submit a recommendation letter to the Minister or his authorised delegate within 30 days of filing the objection. The Minister or his authorised delegate are given a period of 15 days to provide a decision on the matter.
The following offences are considered tax evasion by the NBR:
- Failing to register with the NBR within 60 days from the registration deadline
- Delayed submission of VAT return, or delayed VAT payment exceeding 60 days from the due date
- Fraudulent recovery of input tax that violates the VAT laws
- Unlawfully claiming a tax refund (partially or completely)
- Submitting forged documents, records, or invoices to avoid partial or complete VAT payment
- Failing to issue tax invoices for taxable supplies of goods and services
- Issuing tax invoices for non-taxable supplies of goods and services
- Failing to maintain tax records, invoices, and accounting books as mandated by the NBR
Penalties for tax evasion
Taxpayers who commit tax evasion will be penalised in the following ways:
- Imprisonment for a period of 3 to 5 years and a fine amount of at least the actual VAT amount due, up to 3 times that amount.
- The fine is doubled if the taxpayer repeats the offence within 3 years from the date of conviction.
- If multiple offenders are involved, they are jointly liable for the VAT payment due.
- If a legal person commits tax evasion on their own name or on the behalf of someone else, the legal person will be fined double the normal penalty amount.
Tax evasion is considered an act of dishonesty. However, upon the violator’s request, the NBR may accept reconciliation in 3 instances - before the lawsuit is filed, during the hearing, and before the judgement is given. The violator must pay an amount equivalent to the minimum fine for tax evasion as well as the actual tax amount that was due. Completed reconciliation will result in the end of the criminal case.
- Federal Tax Authority - https://www.tax.gov.ae/