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Common Mistakes made by SME for VAT filing in UAE

Since the introduction of Value Added Tax (VAT), a number of small- to medium-sized enterprises find it difficult to cope with the newly introduced VAT system, thus attracting fines.

Most common mistakes made by small & medium companies when vat return filing in UAE:

  • Non-maintenance of records
  • Mistakes in simply calculating and paying VAT e.g. failing to file the appropriate amounts
  • Poor planning
  • The hiring of the wrong resources
  • Failure to issue valid tax invoices
  • Limited understanding of VAT laws
  • Not having the right accounting setup

Lots of mistakes have been observed related to the input tax deduction due to the misinterpretation of the VAT legislation. The VAT legislation only allows reclaiming input VAT paid to suppliers of goods and services that have been used to make taxable sales.

Mistakes regarding maintenance of VAT records that are most common are as follows:

  • Non-filing or late filing of VAT return in UAE;
  • Failure to issue valid tax invoices and VAT credit notes;
  • Non-maintenance of records and documents as per the requirements of the UAE VAT law;
  • Delay in amending the VAT registration on account of addition in branches;
  • Recovery of input tax pertaining to blocked expenses

Companies should take a thorough review of compliances undertaken and the positions adopted for the last 18 months, create VAT governance framework with proper roles and responsibilities defined for team members. Appoint tax experts for periodic review of tax positions and VAT returns, upgrade IT setup to meet the record-keeping requiring and train to the users.

Being compliant requires constant follow-up of matters and dedicated staff. It is not enough to add tasks to the current tasks of finance managers or controllers. A more holistic approach is required. Although an accountant may have good operational knowledge, he might come short in the legal analysis.

It is very important to train the staff and follows the best tax practices, change their core processes and adapt the accounting systems to achieve a reasonable degree for tax compliance.

The audit and advisory future are undergoing some digital transformation, which is greatly needed in order to provide the businesses of the future meaningful analytics, deliver additional value-added services, it is important to improve internal efficiency and the quality of audit.

VAT filing is an important part of any business if you have any of the facts that are not feline contact experts, they will help to properly file your returns. VAT return filing requires several documentation processes which can be complicated to organize and submit in accordance with Federal tax authority regulations. Our business experts would start from the very scratch and make it much easier to deal with.

VAT return filing in Dubai is highly recommended for you to have a flawless and on-time submission.

Vat Consultant in Dubai

Farahat and co offer eminent service to carter all your taxation requirements will satisfy your organization’s policies and thereby excellence can be achieved easily. We also build a strong relationship with the government by abiding by FTA regulations

What is the eligibility to register for VAT?

Business who del a with taxable supplies and imports should register with VAT if the mandatory vat registration threshold of 375,000 AED exceeds.

if the taxable supplies are less than the mandatory registration threshold but greater than the voluntary registration threshold of AED 187,500 the person has to register for VAT.

How to file a vat return in UAE

The taxpayers in the UAE has to file VAT returns for FTA on a quarterly basis. VAT returns must be filed as per the procedures in UAE VAT law, within 28 days from the end of the tax period. Taxpayers can file their returns online using e-services.

For example, if A has VAT returns for the October to December 2017 quarter, he has to file them before the 28th of January, 2018.

when will the VAT penalties be imposed?

All the penalties for VAT and taxation will be imposed on non-compliance

some of the examples of noncompliance are:

  • Failure by the taxable person to register when required to do so
  • A person failing to submit a tax return or make payment within the required period
  • A person failing to keep the records required under issued tax legislation

what are the sectors exempt from VAT?

Below mentioned categories of supplies will be exempt from VAT

  • The supply of some financial services
  • Residential properties through sale or lease other than which is zero-rated
  • Bare land
  • Local passenger transport