UAE Tax VAT Tax procedures and penalties: practice questions with answers

Question 1

Tariq, aged 15, inherited a VAT-registered trading business from his father. The court appointed his uncle Humaid as guardian on 1 June 2026. Humaid did not tell the FTA about his appointment and filed the business's VAT return for the quarter ended 30 June 2026 late. Which statement is correct?

1. A Humaid is the legal representative, but every penalty for these failures is paid from Tariq's business assets
2. B Humaid has no tax duties of his own, because the VAT registration remains in Tariq's name
3. C Humaid had 30 calendar days to notify the FTA, and no penalty can arise while Tariq is a minor
4. D Humaid is the legal representative, had to notify the FTA within 20 business days, and pays these penalties from his own funds

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Answer: D. A guardian of a minor is a legal representative under Article 7 of the Tax Procedures Law (Federal Decree-Law No. 28 of 2022). The representative must notify the FTA of the appointment within 20 business days and file returns for the person represented. Cabinet Decision No. 40 of 2017 as amended (Table 1, Items 6 and 7) charges AED 1,000 for failing to notify the appointment and AED 1,000 (AED 2,000 for a repeat within 24 months) for failing to file on time, both payable from the legal representative's own funds.

Question 2

In November 2026 Danat Furniture Trading LLC finds it under-declared output tax in its VAT return for the quarter ended 30 June 2026. Under the Tax Procedures Law as amended from 1 January 2026, how should it correct the error?

1. A By voluntary disclosure in every case, because any error in a submitted return must be disclosed
2. B By voluntary disclosure in FTA-specified cases, and otherwise in a later tax return
3. C By voluntary disclosure only where the tax difference is more than AED 10,000
4. D No correction is needed where the error is under 5% of the output tax declared

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Answer: B. Decree-Law No. 17 of 2025 amended Article 10(5) of the Tax Procedures Law (from 1 January 2026). Errors are corrected by voluntary disclosure in the cases the FTA specifies, and in all other cases by correcting them in a later tax return. A voluntary disclosure is therefore no longer required for every error, and the old AED 10,000 test does not decide the route.

Question 3

On Thursday 15 October 2026 Saadiyat Events LLC submits a voluntary disclosure showing additional VAT of AED 42,000. Saturdays and Sundays are not business days, and there are no public holidays in the period. By what date must Saadiyat pay the AED 42,000 to avoid the late payment penalty on it?

1. A 4 November 2026
2. B 12 November 2026
3. C 15 October 2026
4. D 28 January 2027, the due date of the next quarterly return

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Answer: B. Cabinet Decision No. 40 of 2017 as amended by Cabinet Decision No. 129 of 2025, effective from 14 April 2026, treats tax shown in a voluntary disclosure as due 20 business days after the disclosure is submitted; the 14% per annum late payment penalty (Table 1, Item 9) runs only if it is unpaid after that date. Counting 20 business days from Thursday 15 October 2026 (excluding weekends) gives 12 November 2026.

Question 4

On 7 September 2026 Zabeel Print Solutions LLC is notified of an FTA tax assessment it disagrees with. Under the Tax Procedures Law, what must Zabeel do first to challenge the assessment?

1. A Submit a reconsideration request to the FTA, stating its reasons, within the statutory period from notification
2. B Object directly to the Tax Disputes Resolution Committee, which reviews assessments before the FTA does
3. C Submit a voluntary disclosure reversing the assessed tax, which cancels the assessment automatically
4. D Wait for the FTA to start collecting the tax, as the time limit to dispute runs from the first collection step

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Answer: A. Under Article 29 of the Tax Procedures Law (Federal Decree-Law No. 28 of 2022, as amended), a person who disagrees with an FTA decision, such as a tax assessment, first submits a reconsideration request to the FTA, giving reasons, within the time limit that runs from the date of notification. Only after the FTA's reconsideration decision may the person object to the Tax Disputes Resolution Committee (Article 32), and then appeal to the courts (Article 36). (The exact business-day periods are not tested here: the Law, the FTA's service pages and commentators give different figures.)

Question 5

Mirdif Tutors LLC filed its VAT return for the period ended 31 May 2026 late, on 10 July 2026. It then filed its return for the period ended 31 August 2026 late, on 5 October 2026. What is the total late-filing penalty for the two returns (ignore any late payment penalty)?

1. A AED 6,000
2. B AED 4,000
3. C AED 3,000
4. D AED 2,000

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Answer: C. Cabinet Decision No. 40 of 2017 as amended (Table 1, Item 8), from 14 April 2026: failure to submit a tax return on time carries AED 1,000, or AED 2,000 for a repeat within 24 months. Both failures are after 14 April 2026 and within 24 months of each other.

Total = 1,000 + 2,000 = AED 3,000

Question 6

Marwan owned and ran a VAT-registered auto-spares shop as a sole establishment. He died on 3 August 2026, leaving VAT of AED 18,400 for the quarter to 30 June 2026 unpaid. His heirs want to divide his estate as soon as possible. Under the Tax Procedures Law, how is the unpaid VAT dealt with?

1. A It must be paid out of Marwan's estate before the estate is distributed to his heirs
2. B It is cancelled on Marwan's death, as a tax liability is personal to the deceased
3. C Each heir must pay a share of it from his own funds, in proportion to his inheritance
4. D The FTA can collect it only if one of the heirs continues to run the business

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Answer: A. Article 42 of the Tax Procedures Law sets the order of settlement: payable tax and penalties owed by a deceased taxable person for the period before death are paid from the estate before it is distributed to the heirs. The AED 18,400 must therefore be paid from Marwan's estate before the heirs receive their shares.