Bringing VAT to the Emirates has not only stirred up many companies but also resulted to many organizations crossing government regulations and VAT laws in the UAE. Aside from not having to deal with it for so many years, there are a lot of details and basic do’s and don’ts of VAT are not followed.
Among the many problems that clients are facing with regards to tax, most are about filing VAT returns and form presentations.
VAT Filing Issues
Oftentimes, companies are not complying with the forms that the government requires. The Federal Tax Authority (FTA) has issued guidelines, forms, and even software requirements that are compliant to UAE laws and regulations. All duly-registered taxable person or entity should be noting these.
Because of data that are not properly reviewed, companies are submitting incorrect documents with mistakes. And these causes them penalties and further costs.
Non-compliance results to penalties which costed a lot on the part of the companies. See the lost of penalties here.
One of the most common is AED 1,000 penalty for late filing.
The Federal Tax Authority has issued a lot of guides that are even specific to industries such as real-estate, trading, and many more which are useful for complying with VAT laws.
A huge portion of companies suffering from VAT penalties are committing basic mistakes. Among them are:
- Not knowing that there is one fixed formed used for filing returns.
- Sales figures have to be reported by emirate
The government tries to be as helpful with their clarification form wherein any query can be submitted and answered in 40-50 business days. Their regular updates can also be found on the FTA portal.
Another issue that many are facing regarding VAT in the UAE is about VAT disclosure. When a company submits their VAT returns and realizes later that there has been a mistake, it is imperative to inform the government right away and rectify the mistake. Otherwise, this, too, can cause further growing penalties.
VAT implementation and laws has been affecting companies in so many ways. In line with that, there had been consistent changes around other matters too such as the VAT refunds for tourists. UAE visitors can now claim VAT refunds for certain goods that they bought in the country.
Exchange Rates and Currency
Another area that companies have been committing mistakes on and should be paid attention to is the currency of financial reports. It is mandatory that invoices mention values in AED. Some companies, especially those with international offices, have their documents in dollars or euros.
Looking at companies who have licenses in the UAE but do not operate in the country, they file reports on a quarterly basis. Most of these companies are in Free Zones. They apply for registrations but do not have to submit financial reports to the government. Companies with sales abroad and not in the UAE should be applying for deregistration.
SDAC Consulting DMCC has been helping companies with compliance to tax laws to avoid unnecessary penalties. We ensure that our clients have the right forms, procedure, and up to the requirements that the FTA requires. We also deal with government transactions on clients’ behalf for a smooth process and completion of VAT filing process. We assist companies with everything they need with regards to VAT and accounting systems and processes to be fully compliant to tax laws and regulations. Get in touch with us for any query on VAT Accounting or a complimentary assessment.