Non-compliance of VAT: Stringent fines and penalties
Under the VAT regime, taxable persons including business corporates need to be aware of the provisions of the VAT Law that can invite administrative fines and penalties for non-compliance. Administrative penalties are additional amounts payable by a person and may also attract imprisonment for breaching the provisions of the VAT Law. Today’s discussion will reveal these provisions and keep us vigilant on any deviation from the Law. Let us look into the most important Articles as below:
Art. 100 of the VAT Law:
The above penalties will arise under following circumstances:
Responsible Person & Information
VAT Compliant Invoicing
VAT compliance begins with VAT invoicing. Every single invoice generated or transaction recorded must be done in a VAT compliant way. The invoice should be as per the tax invoice format published by the Tax Authorities.
Tax Return & Supporting Documents
Failure to submit a Tax Return for any Tax Period within the deadline.
Not cooperation with Tax Authority
Any action by the taxable person to prevent the tax authority officer or delegates to perform the required assessment, also failure to provide the tax invoices, accounting books, data, records required by the tax authorities will attract penalties.
Further, there more rigorous penalties as below:
Deliberate failure to register with the tax authority within the time frame provided by the Tax Authority in accordance with the threshold criteria and the Ministerial decision no. 3/2021.
Incorrect Tax Return
Assessment by the Authority
If a taxable person deliberately destroys, hide or dispose any documents, records, accounts, lists or any other document requested by the Authority for submission in case of assessment, within (1) year from the Authority’s notification receipt date.
It is important to know that in the case of repetitive non-compliance, the court may double the penalty and increase the imprisonment to the maximum of the legal threshold of punishment but not exceeding half this threshold.
As we know that the Executive regulations are still awaited and the same shall provide more clarity on the administrative penalties that may be imposed on the violator. It is advisable to the taxpayer to be aware of the consequence of non-compliance for the VAT law and should seriously look-forward for timely registrations and VAT impact assessment in their organizations.