After personal income tax and income tax, the value-added tax (VAT) is applied to the consumption or use of goods and services. It stands out as one of the most significant tax policy revolutions. The VAT benefits are multifaceted, such as prevention of indirect taxes, enhanced compatibility with international trade, etc. In contrast with other forms of taxation, it is perhaps harder to evade being an excellent source of income for development. It has helped countries all across the globe, including the UAE, generate more revenues than they could ever have without the VAT in place. When filing VAT returns, several crucial things have to be kept in mind to save you from failing to comply with the laws. Here is a guide:
- Keep the necessary details and documents ready:
The UAE VAT return can be filed online and can be performed only through FTA’s portal. The VAT return should contain all the necessary details as requested by the FTA, such as the name, address, and the TRN of the Registrant, the Tax Period related to the VAT Return filing, The value of expenses incurred, etc. It is highly recommended that you keep a record of all these prerequisites and make sure it has no errors. Double-check the details for any mistakes and consult a tax agent in the UAE if possible.
- Make the return timely:
No VAT Return should be made to FTA later than the 28th day following the end of the Tax Period. Every accountable entity that has registered for UAE VAT should file the VAT returns responsibly, on time. The VAT 201 form can be used by all the VAT registrants as soon as the tax period expires, and it’s wiser that you start the procedure as soon as possible. Non-filing or incorrect filing can have critical consequences, like penalties.
To operate in the UAE, all business entities are accountable to pay VAT on all transactions they make. This is why VAT registration in the UAE is crucial to be managed with adequate care. If you’re not careful with the process and your UAE VAT implementation is out of order, you could end up paying huge fines and hefty penalties. To efficiently deal with the taxation in the UAE and navigate the details of the process, the VAT registrants should consult with a well-reputed tax consultancy company like Harbins. This experience and consultancy can help your company become self-sufficient when it comes to VAT compliance and assist in harmonizing standards across all businesses in the UAE.
Some consequences that you might face in case of any failure are:
- Delayed Filing of UAE VAT
Failure to act in accordance with the laws regarding the UAE VAT Return filing can have its consequences and will result in penalties from the FTA. An AED 1,000 penalty will be levied on registrants who fail to file a VAT Return within the fixed timeframe of the FTA.
- Incorrect Filing of VAT Return
In case of Incorrect filing of VAT returns, the tax registrant can be held accountable for a penalty of two types as follows:
- An AED 3000 fixed penalty for the first time and AED 5000 if done twice.
- A Percentage based penalty on the due amount to the FTA
To wrap up:
The UAE government has put in place huge fines that can cause you a big financial loss if your business fails to comply with the laws. Harbins has the experience with proven success in setting up and running VAT compliant retail outlets that will help you deal with everything.