Post VAT year 2018
Many organizations have faced issues since the introduction of VAT in January 2018. As many companies don’t pay attention to changing laws and regulations, they face complications regarding VAT Return fillings, form presentation, how software capture and interpret data etc. These often don’t comply with FTA’s guidelines and regulations.
The FTA has stated guidelines for software requirements and they need to be met by the registered taxable person. Companies often submit documents with mistakes that would consequently lead to problems and penalties.
It is necessary that a company pays attention to FTA regulations as they are penalized for not conforming to them. Certain industries have been issued guides by the FTA to conform to the VAT Laws.
A late VAT return filing holds a penalty of AED 1,000/- whilst companies that are not eligible for VAT, must pay charges of 2% for seven days of outstanding VAT, 4% for 30 days and 1% per day after 30 days of default. It would be best for companies to disclose them as soon as possible to avoid further charges.
There is a fixed form of filing VAT returns. When companies are reporting the sales figures, they need to be reported emirate wise. The VAT also needs to be based on the location where the service is offered and not based on the customer’s location. This is a common confusion amongst many and to clarify on these issues, the FTA’s clarification form can be used.
They have been around since the past 2 months and it takes about 40-50 business days for the government to respond to queries. Further, an organization needs to immediately correct any mistakes realized after their VAT Return have been submitted.
Laws surrounding VAT have been ever-changing and they still continue to do so. This subsequently affects companies or individuals who aren’t very familiar with UAE laws. Tourists are now entitled to get refunds from the government for particular goods when they exit the country.
Companies must also keep track of exchange rates as many compile financial reports in Euros or US dollars. They often pay no heed to mention invoice values in AED. Therefore, they have to keep track of the UAE Central Bank’s exchange rates which are revised on a daily basis.
Many foreign companies that are licensed to operate in the UAE don’t conduct their trade here. Some of these companies are in free zones and they apply for registration. but don’t report their financial reports to the government. This can lead to penalties. A company that conducts their sales abroad and not any in the UAE can de-register.
VAT Experts at Executive Business Solutions are committed to providing the best VAT Advisory Service in the UAE to clients in compliance with the rules and regulations of VAT in the UAE having their international experience in Taxation. The Tax team at Executive Business Solutions is professionally equipped with relevant industry experience from different ends of the globe.