The government has announced that those businesses with taxable supplies and imports that exceed AED 375,000 need to register for Value Added Tax (VAT). While those that exceed AED 187,500 can opt to register although it’s not required.
Since the VAT registration in UAE was opened on the Federal Tax Authority (FTA)’s website, businesses have rushed to register and even call consulting companies to implement and ensure what needs to be done by their side.
Now that we are just a few days away until VAT implementation goes live on 1 January 2018, businesses should be 100% prepared and VAT-compliant by now.
Taking into account the essential things to have and do for one to welcome VAT, the below list shows you what your business should have done by now.
Preparation Checklist for Value Added Tax
1. Understanding of VAT
One of the first things that an entrepreneur should do before they have rushed into VAT registration in UAE, especially those who are new to tax, is to grasp what VAT is and how it’s going to affect the flow of businesses. Not just that, everyone in the company should be aware what it means that tax is going to be applied to products and services in 2018. It is believed that smooth running of a company can be achieved when everyone has the same vision and goal, and of course, understanding of what they’re doing and what is currently happening.
2. Staff Training
For those companies with an accounts department, their accountants and bookkeepers should be aware of what should be done once the VAT goes live. The VAT implementation will affect the accounting systems from invoices to reporting systems.
They should all be knowledgeable on how to account for VAT and how to file a VAT return especially because FTA has released the penalties that will be incurred by businesses that do not conform with the laws.
3. Professional Advice
For those small- and medium-sized businesses that do not have an accounting department, they should have an accounting firm to rely on by now for their accounting records to be taken care of.
VAT has different impacts on businesses, so it is going to be easier for you to have the opinion of a person who knows the UAE tax law, the different industries in UAE, and the latter’s economy. It is advisable that you have a consultant to run to when you have pressing questions about VAT that you cannot simply find answers to.
Besides, a consultant can help with regard to VAT registration in UAE and other things that you are concerned about regarding VAT.
4. Updated IT Systems
The technology needed to handle VAT should be implemented by now and is up-and-running. With this, you can be sure that it won’t fail you on the day that VAT goes live. Your IT professional should be aware of the systems and troubleshooting required for the upcoming VAT. Any software or system that is a need for taking care of VAT should be ready by now. These systems that are needed for VAT should help accountants to expedite the invoice processing. Automated VAT filing and reporting are also advisable when it comes to preparing your systems. It wouldn’t be ideal to have numerous documents piled up because you cannot keep up with what comes with the VAT implementation.
5. Registered for VAT
Since VAT registration in UAE was opened for months now, people have been scrambling around to find out if it is a necessity for their company to be registered or not. There have been a lot of phone calls received by consulting companies to take care of the numerous questions of businesses trying to be compliant with the UAE’s tax law with the VAT implementation.
In this case, businesses that are required to register for VAT should be done doing so by this time. If any business hasn’t registered yet or has registered beyond the timeframe provided by the government, penalties should be expected.
6. Management and Controls
It is of vital importance that a department or even someone in the company knows the VAT laws and regulations to be able to track its compliance. It is also essential to always be one of the first people to find out about any changes or updates of the FTA regarding the VAT implementation. Any revisions to the tax laws or anything that has got to do with complying with VAT should be noted as always to avoid penalties that will not help your business at all.
With all the things that should be taken note of with regard to the VAT, it is highly advisable that you seek help from consultants. Farhat Office & Co. has been in the industry, helping businesses with any matters that they need to be aided in. We are one of the leading VAT consultants in UAE, and we intend to give you not less than a quality service.